/2017/08/17/economic-models-and-political-economy-brexit-and-democracy/ Exegesis Hermeneutics Flux Capacitor of Truthiness Sun, 03 Feb 2019 07:56:46 +0000 hourly 1 /2017/08/17/economic-models-and-political-economy-brexit-and-democracy/comment-page-1/#comment-640 Sun, 03 Feb 2019 07:56:46 +0000 /2017/08/17/economic-models-and-political-economy-brexit-and-democracy#comment-640 […] In my last post on my Debt­watch blog, I fin­ished by say­ing that the Phys­iocrats were the only School of eco­nom­ics to prop­erly con­sider the role of energy in pro­duc­tion. They ascribed it solely to agri­cul­ture exploit­ing the free energy of the Sun, and specif­i­cally to land, which absorbed this free energy and stored it in agri­cul­tural prod­ucts. As Richard Can­til­lon put it in 1730: The Land is the Source or Mat­ter from whence all Wealth is pro­duced. The Labour of man is the Form which pro­duces it: and Wealth in itself is noth­ing but the Main­te­nance, Con­ve­nien­cies, and Super­fluities of Life. (Can­til­lon, Essai sur la Nature du Com­merce in Général (Essay on the Nature of Trade in Gen­eral) Quesnay’s famous but neglected “Tableau Economique” there­fore described the agri­cul­tural sec­tor as “the pro­duc­tive sec­tor” and man­u­fac­tur­ing as “sterile”—see Fig­ure 1. Fig­ure 1: Quesnay’s “Tableau Economique”, first drafted in 1759, two decades before Watt’s steam engine This was a jus­ti­fied asser­tion at the time, given that the Phys­iocrats wrote before the Indus­trial Revolution—and in par­tic­u­lar the wide­spread exploita­tion in man­u­fac­tur­ing of stored solar energy in fos­sil fuels– and orig­i­nated in France, which was then over­whelm­ingly a rural nation. Smith, who was influ­enced by the Phys­iocrats and wrote in Britain when indus­try was start­ing to exploit fos­sil fuels(specif­i­cally coal) on a grand scale, could have cor­rected this over­sight. But rather than fol­low­ing the Phys­iocrats’ lead on energy, Smith instead saw labour—not energy—as the font of wealth (which he described in the same terms as Can­til­lon: the “con­ve­nien­cies of life”), and ascribed the increase in pro­duc­tiv­ity over time to “the divi­sion of labour”: The annual labour of every nation is the fund which orig­i­nally sup­plies it with all the nec­es­saries and con­ve­nien­cies of life which it annu­ally con­sumes, and which con­sist always either in the imme­di­ate pro­duce of that labour, or in what is pur­chased with that pro­duce from other nations… The great­est improve­ment in the pro­duc­tive pow­ers of labour, and the greater part of the skill, dex­ter­ity, and judg­ment with which it is any­where directed, or applied, seem to have been the effects of the divi­sion of labour. (Smith 1776, An Inquiry into the Nature and Causes of the Wealth of Nations) Eco­nom­ics thus lost the Phys­iocrats’ focus on energy, and instead descended first into the “Labour the­ory of value” and then into the Neo­clas­si­cal (and Post Key­ne­sian) notions of “pro­duc­tion func­tions” in which energy played no role at all. rogerglewis August 17, 2017 at 12:01 pm Reply Your comment is awaiting moderation. Solar Breeders are an interesting question regarding renewables. Thorium Nuclear is also an interesting question. Pricing in Energy and not Cost of money ( Internal Rates of return vis cost of capital is not a new Thing. Soddy was alive to it and it figures in the 1932 book Technocracy. https://archive.org/details/introductiontotec00tech http://letthemconfectsweeterlies.blogspot.se/2017/07/electric-cars-hybrids-renewables.html https://en.wikipedia.org/wiki/Energy_returned_on_energy_invested EROEI under rapid growth[edit] A related recent concern is energy cannibalism where energy technologies can have a limited growth rate if climate neutrality is demanded. Many energy technologies are capable of replacing significant volumes of fossil fuels and concomitant green house gas emissions. Unfortunately, neither the enormous scale of the current fossil fuel energy system nor the necessary growth rate of these technologies is well understood within the limits imposed by the net energy produced for a growing industry. This technical limitation is known as energy cannibalism and refers to an effect where rapid growth of an entire energy producing or energy efficiency industry creates a need for energy that uses (or cannibalizes) the energy of existing power plants or production plants.[37] The solar breeder overcomes some of these problems. A solar breeder is a photovoltaic panel manufacturing plant which can be made energy-independent by using energy derived from its own roof using its own panels. Such a plant becomes not only energy self-sufficient but a major supplier of new energy, hence the name solar breeder. Research on the concept was conducted by Centre for Photovoltaic Engineering, University of New South Wales, Australia.[38][39] The reported investigation establishes certain mathematical relationships for the solar breeder which clearly indicate that a vast amount of net energy is available from such a plant for the indefinite future.[40] The solar module processing plant at Frederick, Maryland[41] was originally planned as such a solar breeder. In 2009 the Sahara Solar Breeder Project was proposed by the Science Council of Japan as a cooperation between Japan and Algeria with the highly ambitious goal of creating hundreds of GW of capacity within 30 years.[42] Theoretically, breeders of any kind can be developed. In practice, nuclear breeder reactors are the only large scale breeders that have been constructed as of 2014, with the 600 MWe BN-600 and 800 MWe BN-800 reactor, the two largest in operation. On Criticism of DSGE Models, post before this excellent post and another real humdinger, I made these responses to an old Reddit discussion provoked by that Discourse. I agree A need for Pluralism is very much needed, would this extend to those of us who reject Usury in the fully Aristotlean sense? http://letthemconfectsweeterlies.blogspot.se/2017/08/economic-models-and-political-economy.html […]

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