big news from (Henshaw, Grantham &) the earth

My article in New European Economy describes the 10 year global price spiral in natural resource markets as a true “Decisive Moment for Investing in Sustainability” (local PDF copy).  It shows the world is now pressing natural limits for affordable resources, in a way as potentially explosive and dangerous to a growth economy as a global financial bubble, with more lasting effects.

The long expected “big crunch” at the end of growth has a surprising shape.


For a growth economy shifting from having ever cheaper to ever more unaffordable resources is the long expected “big crunch” at the end of growth.   We just didn’t know what it would look like, or that it would be a bigger and more urgent dilemma for prosperity than climate change.

A major business leader, Jeremy Grantham, recently issued confirming report on the future of natural resources from his view Wake Up! The Age Of Cheap Natural Resources Is Over (200k) .   It’s a critical new issue, marking conclusive evidence of a change in the natural environment’s response to us.  How people respond now matters a great deal.

The popular effort is likely to be to accelerate our depletion of resources rather than relieve our growing demands  Continue reading big news from (Henshaw, Grantham &) the earth

What kind of search is finding the new model?

This is a response to Graeme Rickard’s post on Apr 27 to the Australian environmental network GreenLeap, discussing why the dimensions of the environmental problem seem increasingly unsolvable.

Graeme,  When you notice that many of our best traditional solutions are making our energy and environment problems much worse now, it raises the stakes, but also lets you trace existential dilemma to its logical origins.

The origins of the problem provide solid evidence the problem is our whole model, not shortcomings in our execution.

To have the epiphany needed to change your whole way if thinking, though, seems require finding some hidden dimension of our thinking that can be “uncurled” to help us find ways to branch off the model we have toward something else.

How some of our most trusted solutions simply won’t work at all exemplifies the problem. The “solution” of providing more energy to an “energy starved” economic system with an infinite energy appetite, actually just feeds the addiction. It does not cure it. Continue reading What kind of search is finding the new model?

Is it “the system” or “the excess”?

In Finance Professor Earns “King’s” Ransom, John Fullerton of the Capital Institute about a professor, acting as an expert witness, paid $1 million dollars in the financial fraud trial of Raj “King”.  It looks to me that he was paid to say the information, that Raj had traded on, was available to the public, so… somehow would not actually “illegal” to use even if the way he got the insider information was illicit.  (wow!)


To me the question is how to tell the difference between using money to make money as a general good as our culture treats it, and the natural limits at which it upsets and falsifies everything we stand for to continue supporting it. It seems to take us to where power is too powerful to put limitations on, and that’s not good. Continue reading Is it “the system” or “the excess”?

New Economic Thinking – What Soros said

My post on new thinking on the Complexity Economics suggested by the need for better conceptual models for reading economic data discussed at the INET – Bretton Woods conference, was also generously reposted on The Capital Institute Blog. This is to add to that what Soros said about economic complexity in the opening session of the INET conference Emerging economic order : What Lies Ahead? (with Anatole Kaletsky moderating talks by Jean-Paul Fitoussi, Harold James, Kenneth Rogoff and George Soros), and my brief comment too.


Soros is one of the few people talking about the world economy as a system of independently acting parts, which are now having more and more difficulty coordinating. I think you may recall that increasing complexity causing difficulty for coordinating the parts of systems, is a natural condition that occurs at the limits of growth, that I have actually been talking about with concern for decades.

Soros mainly described what changed when world financial regulators had to intervene to prevent the financial sector from collapsing, as it would have on its own. He also described briefly how he had profited so much from the preceding economic order, moving his money ahead of the curve, by reading the emerging positive feedbacks and then the inevitably following negative feedbacks, that take things back to stability. Continue reading New Economic Thinking – What Soros said

The oddest rationalization of all – “in misinformation we trust”

This is a slightly edited version of my comment on Andy Revkin’s NY Times Dot Earth blog, on “Rationalization masquerades as reason”

The odd rationalization of them all is that what we ask the economy to do by spending money has no environmental impact… if we don’t see it. It’s illogical, but is actually how nearly everyone thinks, that you have no responsibility if you have no information about it.

For example, the real total impacts of using money are naturally going to be an equal share of the world total per dollar, on average. That’s just a mathematical tautology. Everyone will agree in principle, but most then still count the impacts of *their* spending as “0″, instead of “average”, because they don’t see what to count. Continue reading The oddest rationalization of all – “in misinformation we trust”

We need better conceptual models for reading economic data

Reposted from a guest blog entry at the Capital Institute


The recent INET meeting at Bretton Woods organized by the Institute for New Economic Thinking (INET) with support from people like George Soros, brought together a large group of leading creative economists and ecological systems scientists, to push the envelope in discussing how to reorganize the world economic system. Choosing the same site for which the world changing Bretton Woods conference after WWII was named, was both intentional and seemed quite appropriate.

A strong “vision” seemed to be emerging, even if the details of how to advance it were not so clear. All might agree that nature’s economies seem to work better than ours, and we need to change something. The concluding conversation between Paul Volker and George Sorospresented some of the broad issues, nicely moderated by Gillian Tett, and was quite interesting.

I liked the session on “Complexity Economics” particularly. It really is necessary that people begin thinking of the economy as a complex system, and to learn the lessons of ecology for understanding how it can learn to be as stable and healthy as ecologies.

The concluding comments were also a very nice lead-in to my own approach, that to meet the challenge of using complex systems modeling, what we need are better conceptual models for reading economic data. A good example of new data needing new concepts was discussed in another session by Duncan Foley and I insert his first graph below.

US National income, Value Added & Employment
Continue reading We need better conceptual models for reading economic data

Is our “explanation world” how the “natural world” works by itself?

I commented yesterday on a Brian Lehrer radio show with Francis Fukuyama, discussing his recent book on The origins of political order.  You may recall Fukuyama’s previous book from 2006,”The end of History”, which caused some stir. though history continued in any case.


Francis Fukuyama seems to do a good job of tracing the implications of modern social science theory back toward the origins of society.  He represents the natural process of human cultural evolution as a cultural historian naturally might, in terms of the history of cultural explanations.

That describes the evolution of “the explanatory world” of our attempts to represent history in terms of our cultural values.  It doesn’t seem to reflect any consideration how the “the natural world” would have evolved to create the features we then attempt to explain. Continue reading Is our “explanation world” how the “natural world” works by itself?

Missing information – feeling, reasoning & sleeping on it

We need humility to live with a world that works mostly by missing information.

Responding to John McCreery’s recent comment on Open Anthropology – Arguing From Limits (also quoted below mine here) discussing the hazard of raising doubt about people’s faith in using efficiency to reduce environmental impacts, as I had called it “a mirage”. The problem is that the visible energy uses people focus attention on are much smaller that the hidden ones we act as if quite unaware of. For the full exchange you You might start from my first comment in reply to John.

The scientific evidence (from Systems Energy Assessment) is that the visible energy demands of technology that people focus on are nominally 20% of the total, and the hidden energy demands of the commerce that uses technology is nominally 80%. That makes the effort to reduce energy use with technology efficiency, while expanding commerce to make money, quite self-defeating as a way to reduce energy use. This seems to be one of the more direct ways to explain the problem.


John, There is certainly a moral quandary, if taking away a hopeful but mistaken belief causes people to give up and quit! That’s the kind of dilemma that get’s worse if you don’t acknowledge and find the right response to. To me that also involves looking at the apparent “easy” solutions, and asking if they really solve the right thing or not.

You might assume you’re talking to one part of an audience and really needing to shift attention to another. That “worst case” example is indeed one I’ve repeatedly run into.

I’ve also found that no amount of “icing” on the cake changed the flavor of the message those people were getting. To me it says I needed to find other people or other ways to address the greater faith and intelligence that everyone sometimes displays, that people yearn to have more respect for.

I may not know quite how to say it, but I think a society needs to be led by people who would see the problem as “career change” rather than “emergencies”, a need for more truthful and communicative models. If the “mirage of efficiency” is caused by people believing that it’s the energy uses they see that control events, when in fact it’s the energy uses they don’t see, the error is a kind of arrogance of information.

Our information is then serving to blind us to what we might well have understood anyway, from how money works. So to develop a “new career” as conscious beings, and be more alert to what’s missing from our information, would involve watching for what some story teller may be hiding from us with it.

It’s great that you suggest Tolkien’s The Lord of the Rings fable as a model to discuss this from. I ask whether the fable leads the protagonist to a more practical or a more fatalistic view of life in the end.

Sure, striving for the truth is arduous and dangerous, but don’t all those great selling books and movies on the “heroic journey” theme seem to end in “the great truth” being a magic spell? That might not always be false, but is at least false for the successes your efforts are responsible for earning. It may well feel like “pure magic” when you see the skeleton walls of your new house capped by a roof for the first time, giving you your first glimpse of the end product. It’s not magic that got you there, though, and not magic that’s needed for the career change in our mental habits for people to learn to look beyond their information to understand the realities of the natural world.

How people change how they think seems to be by learning experiences with their feelings passing new questions to their reasoning, and reasoning passing back new propositions to feel the meaning of, and then sleeping on it and mulling things over with friends, as a way of exploring. A lot of what I don’t know is what ideas will awaken that kind of curiosity and hunger for learning in other people.

Looking for it, though, is much of why I try to use the vernacular, and associate common experiences with uncommon points of view that came from a more scientific curiosity. The idea of calling our cultural faith in efficiency “a mirage” came from John Fullerton as his way of condensing some of my scientific models.

I think that image does just what is needed, as far as connecting reasoning and feeling on the subject. It still needs to be handled in an emotionally supportive way for people who have not really considered it yet. So, that’s a model, connecting reason and feeling for new challenges, and giving people emotional support as they struggle with them.

In that article of mine on “A decisive moment for Investing in Sustainability” I try to combine raising the challenge of new kinds of learning with the emotional support people need to make it their own. The subject there is our belated discovery of our emerging global resource crisis, with demand now exceeding supply systemically and world markets responding by raising prices in a panic.

For sustainability professionals being called in “to fix the problem” and needing to invent new models at the same time, demands more from them in wits and courage than anyone can ask of them. Because this crisis is now upon us, it’s also just too late to “hurry up” to avoid it. The question seems more one of choosing to fully engage in learning how our world is changing and making that a new part of our lives.


Responding John McCreery’s comment on the thread “Arguing from The Limits”

The problem with presenting efficiency as a mirage is that the result may not be the one you anticipate. If the dream of a simpler, more sustainable life comes to be seen as fundamentally fallacious, you may well have more people simply giving up, going fatalistic, leaving it up to God, or choosing “eat, drink and be merry, for the end is nigh.”

A better approach might begin with praise for personal steps toward a simpler, less energy-intensive life (people like being flattered), followed by the observation that, in large part, we have simply shifted the energy burden somewhere else, where the monster grows stronger until it is ready to devour us. We have won a battle, but it’s only a skirmish.

The war will be long and hard. Instead of pissing on the buds of what could become a major change in attitude, treat them as heroic first steps in the long march to the ultimate goal. Consider the narrative arc in The Lord of the Rings. If Tolkien had introduced the Hobbits as a bunch of deluded idiots, who would care if Frodo managed to destroy the ring.

Also, thinking about what’s going on now in Japan, a catastrophe might help. With the horrible news from Northeast Japan still fresh in everyone’s mind and emotions, the Fukushima reactors offline, and a lot of the power grid still in a mess, people here have reacted positively to government calls to save electricity.

Train schedules have been reduced, half the escalators are stopped, stores are closing early, and the neon has been turned off all over town. The government has announced a policy under which industry will be required to lower power consumption by 25%. The last time this happened, during the 1973 oil shock, Japan became the most energy-efficient country on the planet.

I recall a conversation with a friend. We agreed that planning to avoid catastrophe is important. That said, the really critical issue may be whether we are prepared to respond effectively when catastrophe strikes. I was reminded of one of Robert Parker’s Spencer novels, whose protagonist is a hardboiled Boston detective.

In this particular tale, Spencer has rescued a kid whose parents are threatened by the mob and is driving him up to a cabin in Maine, where Spencer and the kid will hide out and keep the kid safe from becoming a hostage. The kid asks Spencer if he’s worried that the mob might track them to the cabin.

Spencer replies that he doesn’t worry about that. All he thinks about is how he will respond if they do. As ugly and manipulative as it may sound, I wonder if the same principle doesn’t apply to what you are trying to do.

By all means keep plugging away and spreading the word about the problem you have identified. But think seriously about how to turn the next, inevitable catastrophe into a springboard for getting the message out to people who are briefly more likely to accept and move on it.



The economic meaning of “steady state”

Herman Daly offers his view of what a “steady state economy” is and how to use the term in a guest blog post on the Capital Institute website. I agree that understanding the meaning is more important than exactly what name you use, but there are important types if “steady states” not yet being discussed.

My comment, posted there and below, is for helping distinguish between the “lively” and “lifeless” forms of steady states that are possible for economies in nature. Of course, I raise the curiously overlooked concise meaning that Keynes would have given the type of lively and conflict free stable state of healthy economies too, as he discussed in “The General Theory…” but was misunderstood.


Finding the Fitting Name

I’d agree with Daly that ultimately what you call the ideal kind of steady state for an economy matters less than whether what you achieve is something close to an ideal steady state. I study the physics of “open systems”, a.k.a. natural economies, and there are clearly discernible “ideal” steady states one might seek to achieve.

There are the ecosystems that while relatively stable and full of competing populations also display such deep and diverse complementary relationships between populations that the whole system operates with a relatively low level of internal conflict. Continue reading The economic meaning of “steady state”

Four comments “the world” liked… Mar 2011

I get Google alerts to popular comments I’ve made on other blogs. Following are the most recent 4:

  1. The inequality of wealth as a natural process II – Brian Lehrer on WNYC
  2. The inequality of wealth as a natural process I – Brian Lehrer on WNYC
  3. Efforts to “monetize” nature for financial trading – Open Anthropology
  4. How natural systems diverge from models – John Baez’s Azimuth blog

________ Continue reading Four comments “the world” liked… Mar 2011