All posts by pfh

Old Blog Site changeing

I’ll be switching from posting at “” to “” 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

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

The telling mental gap at “”

There’s a now famous study of progress in human welfare, with a common glaring flaw.

The flaw interestingly betrays how humans are dazzled by positive information, and quite forget what we’re looking at.

Hans Rosling has traveled the world, presented at the TED talks many times and raised huge amounts of money for his work, based on the beautiful data animation videos he has produced, like the one on world progress in human welfare over the past two centuries.

It displays the remarkable course of human progress, as proof positive of the soundness of the capitalist approach to economic development and the universal value of creating wealth for all that is evident in the data. It is indeed a remarkable history.

Gapminder image of the modern world

Continue reading The telling mental gap at “”

Using net-energy system boundaries to study working units of nature

Important new tool for understanding businesses as physical systems AND measuring their total resource demands

The research paper Systems Energy Assessment (SEA) now published as of Oct 2011, with Charlie Hall’s special collection of Biophysical Economics papers New Studies on EROI in Sustainability (MDPI).  The pre-publication copy can be found at the Cornell physics archive, and at the references site, along with other notes.

There are two main findings. One is that if you consider physical causation as a way to trace how energy uses are connected, a business needs to be considered as a whole organization of working parts. At present statistical measures of business energy use treat businesses as just a collection of technologies with no operators or environments. That difference can be measured, and seems to call for a typical increase in the environmental energy use impacts and risk exposures of businesses by about fivefold.

The other main finding is that it seems generally possible, for the first time, to use objective methods to locate the natural organizational boundary of individual net-energy systems in the environment. That allows traditional thermodynamic and net-energy physics analysis and to refer to organizational units of the environment as subjects of natural science.


What’s one thing everyone could do, to slow climate change

An exchange with John Baez on his Azimuth blog.

Phil Henshaw says: May 28, 2011 at 1:54 am

I think the actual problem, and why it’s so intractable, is that our “resource management system” is designed to serve our financial system,… not the reverse.

Our financial system is designed to create stable positive financial returns, so people can keep adding their winnings to their bets, and have an ever multiplying “free lunch”. The critical energy management decision necessary for doing as best one can at that (allowing punctuating the endless boom with enough busts all the time…) is to accelerate the economy’s use of inexpensive energy as fast as economically feasible, forever.

What results when people model their implementation of physical law following rules they happen to like for financial law, is it creates a simply enormous explosion of wealth that produces a completely unmanageable society and economic system (instead of a comfortable home on earth).

I think that’s a big part of what is so self-defeating in the human intention to “tame nature” to behave like we think it should. We haven’t seen the value of watched nature to see how it works first.


Reply, John Baez says: May 28, 2011 at 8:56 am

Can you translate these insights into an answer to the question: “What is the one best thing everyone could do to slow down climate change?”

If so, would the answer be some version of “think differently”? Or is there a concrete action that you can propose?

Reply, Phil Henshaw says: May 28, 2011 at 9:27 pm

The theoretically necessary step, that no one seems to understand when stated in abstract terms, is for the net-energy surplus that was first applied to growing the system, now be applied to adapting the system to a finite and fragile planet. The world’s institutional economic models and planning assumes there will never be a need for that, and money can keep compounding forever.

The practical means of changing that comes from J M Keynes, and what to do with money when the economy can’t grow. It follows from how the surplus resources for growing the economy were managed to start with, by the use of profits from investment to proliferate more investment.

To keep investment funds from becoming worthless when the economy can’t grow, and make the system manageable again, you’d need to deflate that money spiral. As a personal matter it means the people whose money it it need to stop growing it, and be careful to invest it in good purposes.

That would involve a)devoting investment funds to sustainable development rather “fast money” and b)stop adding investment profits to expand total investment, divesting net profits for some other good purpose. There would be a lot of negotiation as to how to achieve that, of course, as all our institutional plans assume it’ll never occur.

“That would involve a)devoting investment funds to sustainable development rather “fast money” and b) stop adding investment profits to expand total investment, divesting net profits for some other good purpose.”

I’ve been getting traction with some of the leading thinkers in the ethical investment community (John Fullerton, Hazel Henderson and others) by saying it’s a matter of combining “green investment” with “green divestment”, redirecting the savings in the “giant pool of money” for good purpose, to reduce the absolute scale of our demands on the earth.

Keynes actually wrote a whole chapter of his big book on it, Chapter 16 in The General Theory, though due to the cultural belief in perpetual growth his entire profession ignored it completely. I have a scanned copy on my site fyi. It’s readable, but you have to fight through his discussing it in terms of the aggregate variables of the world economic system, entirely ignoring any social or political debate… To find my references to that, and to “the widow’s cruse” parable he first discussed in in terms of, you can browse my blog posts mentioning Keynes –


p.s. Yes, now it would seem that the business people of the time took the magical secrets Keynes offered for how to stabilize the growth system for making more and more money, and have now successfully run it completely into an impenetrable wall of natural complications and resource exhaustion, just as Keynes predicted and explained clearly how to avoid. So, the one thing everyone can do is start reducing appetites and investments, while divesting their profits and making that a new truth for society, as they begin to study and understand why.

Why “going to the edge” makes you rich, and assures falling over

The problem with “going to the edge” in nature is she keeps moving the edge, back and forth.

It’s a trap. Having a practice of always maximizing your take and going to the limit leaves you vulnerable to natures perennial habit of leading you on when she moves it out, unaware that the natural next step is moving it back.

The things that are more of a problem are the ones your’e close enough to the edge of to make it impossible for you to respond to in time, when they move. The pattern of natural fluctuation is somewhat like an irregular pattern of breathing. Continue reading Why “going to the edge” makes you rich, and assures falling over

Wild Resiliency – thought is an ecological experiment too

A post to Wild Resiliency on The Seven Keystone Processes – adding that thought is an ecological experiment too.


I liked the statement at the top, that:

“we too easily believe ourselves to be the center of the universe and the measure of the world”.

How we somehow manage to conjure up the notion that the flickering images of our minds as the facts of nature, actually placing each human at the center of “their” universe, has long been a puzzle to me. I see its power often enough.

It’s a great deal of fun to have a quite believable universe to live in, much as a fantasy, where we each can have everything we see or experience mean anything we like to fit the other beliefs we happen to like. Continue reading Wild Resiliency – thought is an ecological experiment too