Georgescu-Roegen vs. Henry George vs. Wakefield vs. Solow

by on January 9, 2018 at 12:05 am in Economics, History, Science | Permalink

For Georgescu-Roegen, the ultimate fixed factor is the laws of physics, due to entropy.  Economic systems cannot receive an ongoing influx of both energy and matter indefinitely, and so eventually they reach limits to growth.  At that margin substitutability breaks down and catastrophe ensues.  To check this outcome, we must find a way to live with slower rates of economic growth, and eventually a zero or negative rate of economic growth.  For him this is as much a criticism of Marxism as of capitalism, and he wrote about making do with agrarianism.  Consistent with this view, his consumer theory portrayed wants as hierarchical rather than smoothly substitutable.  He would have liked this Alex post on not all gdp being created equal.

For Henry George, the ultimate fixed factor is land, due to the nature of space.  There is always enough energy, due to Julian Simon-like arguments that allow capital and ingenuity to be substituted for all other fixed resources, except for  land.  Economic systems cannot create or activate more land indefinitely, and thus the marginal benefits of growth are captured mostly by landowners, to the detriment of social welfare.  At this final margin substitutability breaks down and widespread poverty ensues.  To check this outcome, the returns to land must be redistributed to the rest of society, ideally through a single tax.  Unlike many environmentalists, he wasn’t worried about soil erosion because land is land.

For 19th century colonial theorist Edward Gibbon Wakefield, human beings and the positive externalities from human contact are the ultimate scarcity.  If you let people settle the countryside, you will have an underpopulated republic of deplorables — there is no substitute for city life!  So the price of external farm land has to be kept high, so that settlers cluster in the city and as wage laborers contribute to ongoing innovation, urbanity, and economic growth.  Wakefield worked in New Zealand — did they listen?  If Wakefield were around today, maybe he would want to cut off broadband to large swathes of the Midwest and Appalachia.  Justly or not, he cited rural French Canadians as an example of what he was worried about, whereas Georgescu-Roegen might have appreciated their agrarianism.

For Robert Solow, ultimate fixed factors do not come into play and substitutability reigns at all relevant margins.  If some resources become scarce, just substitute in more capital.  Growth continues forever, though it can be accelerated by investing more in the ultimate growth driver, namely new ideas.  Georgescu-Roegen argued that Solow did not incorporate the idea of entropy or insights from science.

Is it proper that Solow’s model should have so dominated in the economics profession?

You cannot understand or evaluate environmentalism without revisiting these debates.  One reason many environmental critiques do not seem so strong is that they are trying to measure costs in a Solow-like framework, when in fact the underlying model might involve core non-substitutabilities, a’la the other thinkers.  Unless you stress how not all gdp is created equal, the costs of bad environmental outcomes won’t show up as very high, not relative to total wealth.  It will appear as if you always can substitute away from bearing those costs full on, even though perhaps you cannot.

My own view is that the ultimate scarcity in today’s system comes from what the political economy of our societies and polities can bear, but that must await another day.

1 jorod January 9, 2018 at 12:20 am

Read Solzhenitsyn, August 1914, The Red Wheel.

2 Matthew Young January 9, 2018 at 12:59 am

My limiting constant is the Avogadro number for the agents, how many of the smallest things can they pack into the sphere. his is economically equivalent to asking how many 7/11s we have in the perimeter before we go to the flea market and eat from taco trucks.

This is equivalent to dividing up the transaction basket sizes such that every basket in the sphere is optimally full, making the next transaction is equally uncertain everywhere. The fixed uncertainty is the complement constant to Avogadro’s number. Value added chains in economics pack sphere, hey monitor the accuracy of he sphere by keeping their input and output queues stable everywhere. Keeping the queues stable is equivalent to maximizing entropy.

3 Michael Feltes January 9, 2018 at 1:16 am

I’m very happy to see some discussion of Georgescu-Roegen here. As interested as I am in economics and as valuable a method of analyzing the world as it is, at a certain level so much of the analysis I read seems like a pointless exercise to me. We do not know how to replicate the services that the ecosystem provides to our civilization, particularly the sinks for our wastes, which means they are literally priceless, which means that they’re not visible to the market and not taken into account. If you take an exercise like Costanza et. al. 1997 seriously, where the authors value these ecosystem services at nearly 2x world GDP, then how can any new endeavor, any expansion of economic activity, be justified? But what kind of position does that put our society in? Who’s going to volunteer to sacrifice himself or herself to bring the footprint of human civilization within the Earth’s carrying capacity? It’s hard to imagine what one can usefully do with one’s life if this truly is the situation in which we are enmeshed.

4 Mulp January 9, 2018 at 11:36 am

Much as economists want to deny work as the foundation of economics, believing in many cases the ideal economy eliminates the costs of labor, such that capital can be created from nothing, everything comes down to work.

Money is a proxy for work.

Without work, money has no value.

Destroying productive assets, most by burning capital, allows consumption without work, but it is not sustainable.

Even if coal was infinite, and even if burning coal had no harmful effect, West Virginia would still be poor and getting poorer as innovation reduces the work required to burn up West Virginia land. However, much of the valuable land in West Virginia has been burned and is thus no longer valuable.

When fewer and fewer workers are paid, they pay fewer and fewer workers, leading to economic decline.

But hey, costs have been cut drastically in West Virginia. Much less is paid to workers individually and in the aggregate, cost cutting, and according to free lunch economists, all that cost cutting has put more money in the pocket of West Virginians than they lost in wage income.


5 clockwork_prior January 9, 2018 at 1:18 am

‘For Georgescu-Roegen, the ultimate fixed factor is the laws of physics, due to entropy.’

And Dyson pretty much put the final flourish on that idea – ‘A Dyson sphere is a hypothetical megastructure that completely encompasses a star and captures most or all of its power output. The first contemporary description of the structure was by Olaf Stapledon in his science fiction novel Star Maker (1937), in which he described “every solar system… surrounded by a gauze of light traps, which focused the escaping solar energy for intelligent use.” The concept was later popularized by Freeman Dyson in his 1960 paper “Search for Artificial Stellar Sources of Infrared Radiation”. Dyson speculated that such structures would be the logical consequence of the escalating energy needs of a technological civilization and would be a necessity for its long-term survival. He proposed that searching for such structures could lead to the detection of advanced, intelligent extraterrestrial life.’

Of course, Dyson was a physicist, not an economist. And the volume of a Dyson sphere is such that concerns about ‘the ultimate fixed factor is land, due to the nature of space’ are not really all that relevant. Despite Simon’s view, a Dyson sphere is built because unless one can utilize all of the energy of a star’s output, there is never enough energy for a truly technological society to meet its needs.

‘You cannot understand or evaluate environmentalism without revisiting these debates.’

The Chinese, with their truly world class air pollution problems and thousands of years of history, appear to not care about any of those concerns. It seems as if being reminded what is going on every time you go outside and breathe lends an entirely different perspective.

6 derek January 9, 2018 at 1:23 am

The Chinese will start worrying about pollution when they have heated homes.

7 clockwork_prior January 9, 2018 at 1:35 am

Actually, the Chinese are worrying about air pollution right now, and cutting economic growth in response.

Since length now seems to play a role in the shiny new day that has dawned here, I’ll just highlight ‘“The Chinese government has turned very serious about fighting pollution,” Yao wrote in a note. It would be “more than a transitory objective for the current leadership. Modestly slower growth will be a necessary sacrifice for maintaining social stability over the medium term”.’ and ‘Assuming production cuts were strictly implemented, industrial production growth was likely to be 0.6 to 0.8 percentage points lower than otherwise, while GDP growth would be 0.2 to 0.25 points lower in the next six months, Yao said.’

Seems like breathing is even more important than heat, particularly as the children of high level Party members breathe the same air as the poorest migrant worker.

8 Alistair January 9, 2018 at 5:08 am

You’re both right. We had this post yesterday.

China is now rich enough (~$10k/capita in the big cities) to trade off some growth for (slightly) lower air pollution. The restrictions bite most in the richer cities, and less in the countryside. The latter is poorer, less polluted and more in desperate need of energy.

It seem China is following a normal development trajectory on environmental protection.

9 clockwork_prior January 9, 2018 at 5:33 am

Well, Derek would have a hard time finding it – you can go back and look for yourself. Brevity seems to be the fashion that commenters will be adopting in the future.

10 Alistair January 9, 2018 at 5:35 am

>Brevity seems to be the fashion that commenters will be adopting in the future.


11 clockwork_prior January 9, 2018 at 5:52 am

Call it a prediction – you can verify itself yourself, as it is testable by paying a bit of attention.

12 Todd K January 9, 2018 at 9:48 am

China’s GDP per capita PPP is around $16,000 and over $25,000 in the cities, the same as Japan in 1990.

Air polution started to decline from 2000 although 2008 was an outlier due to the Olympics and has had flat periods.

PM2.5: 2009 = 102 ; 2010 = 104 ; 2011 = 99 ; 2012 = 91; 2013 = 102; 2014 = 98; 2015 = 83; 2016 = 73

13 Brian Donohue January 9, 2018 at 10:06 am

“Brevity seems to be the fashion that commenters will be adopting in the future.”


14 Ricardo January 9, 2018 at 10:07 am

And yet, I would rather live in 1990 Japan than in 2018 China…

15 RafaelR January 9, 2018 at 10:47 am

Japan’s per capita income in 1990 was about 36,000 dollars converted by CPI from 1990 to 2017 with PPP converter from 1990’s ICP round. Tokyo’s income in 1990 was aboit 50,000. China is still far from this income level.

16 Todd K January 9, 2018 at 5:20 pm

“Japan’s per capita income in 1990 was about 36,000 dollars converted by CPI from 1990 to 2017 with PPP converter from 1990’s ICP round. Tokyo’s income in 1990 was aboit 50,000. China is still far from this income level.”

Japan’s GDP per capita is about $38,000 in 2016 dollars and according to the OECD was at $25,000 in 1987 – I was off by three years. In 1990, it was at $30,000. Shanghai and Beijing’s GDP per capita PPP is now at $35,000 which is where Japan was averaging in 2005.

17 Alistair January 9, 2018 at 8:12 pm

Sorry;$ / £ transposition error on older data.

18 Mulp January 9, 2018 at 11:56 am

“Actually, the Chinese are worrying about air pollution right now, and cutting economic growth in response.”

China is not cutting economic growth to cut air pollution.

Cutting pollution is costly, and that requires paying even more workers to build even more capital.

China growth is limited by declining returns on investment.

Where $1 could increase productivity of workers by ten cents an hour, based on farm labor moving into factories producing ten cents per hour more in output, today $1 to move a factory worker to a more productive factory only increases output by a few pennies.

Moving coal miners into construction of wind, solar, batteries will fuel growth in China, IS fueling growth in China.

On energy, China followed the well trodden path of the West to its current point, and now China is beating a new path because the West seems unwilling to pay the cost of economic growth.

Growth increases costs!

It costs 10 trillion more to have a GDP of $20 trillion than of $10 trillion.

19 Todd K January 9, 2018 at 7:44 pm

“Moving coal miners into construction of wind, solar, batteries will fuel growth in China, IS fueling growth in China.”


20 Harun January 9, 2018 at 5:16 pm

China is definitely worried about air pollution now.

In their typical fashion, they just decide to clamp down on any fatcry using coal in Hebei province. That’s a lot of factories since Chinese have a lot of coal, so the factories set up to use that source of energy.

So, you get sudden scarcity in supply of say, tempered glass, because the factories have to stop production for a while, or do it secretly.

Yes, they could switch over to nat gas, but that takes time and a lot of money. And the government seems to not give people time (or maybe they did but everyone just ignored them? I think they probably decided suddenly to start cracking down.)

We have factories that spent one million RMB on getting the proper “license” which they were very proud of. Then they still delayed shipments by a month because their glass supplier or engineered wood supplier can’t provide components.

BTW, one million RMB is a lot of money for a license. If the goal is to have cleaner production, a high license fee seems….counterproductive.

21 Yancey Ward January 9, 2018 at 2:26 am

One may as well complain about the heat death of the universe and, thus, why bother with anything at all.

22 clockwork_prior January 9, 2018 at 2:42 am

“In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again.” – John Maynard Keynes, A Tract on Monetary Reform. Macmillan and Co. 1923. p. 80

23 Loki January 9, 2018 at 3:03 am

Yes, I can’t see how companies could innovate their way out of thermodynamic equilibrium. So a suggestion (as in the above summary of Solow) that growth can continue *forever* looks wrong.

But the heat death of the universe is a very long way off in the future. So with that in mind the discussion could be reframed to whether economic growth could continue for the billions of years until the stars stop shining.

One often discussed way for growth to continue is for people to focus upon virtual experiences rather than accumulating ever more physical goods and services.

24 Alistair January 9, 2018 at 5:20 am

Indeed. But the environmentalists aren’t _really_ concerned about sustainability over a trillion year span, are they? Does anyone seriously believe they are interested in Deep Time and the ultimate destiny of humanity? Anyone?

Yeah. Exactly. They just want power to compel others here and now to eat organic tofu.

>But the heat death of the universe is a very long way off in the future

Exactly. It’s well outside any reasonable planning horizon, unless your discount rate is zero, and even then _other_ things should command your attention first. Georgescu-Roegen’s agrarian civilisation would be extinct by a comet fragment or super-eruption or main sequence changes or local supernova long before it has to worry about entropy in Deep Time.

25 clockwork_prior January 9, 2018 at 5:50 am

‘They just want power to compel others here and now to eat organic tofu.’

You must know some fairly exotic individuals. In places like Baden-Württemberg, for example, a majority of voters simply want to shut off the nuclear power plants, as agreed to since 2000. That they need to keep voting people out of office who refuse to go along with this just shows how difficult it is to get those in power to pay attention to a majority of voters over an extended period of time. Almost as if in a democracy, it takes work to demonstrate that a majority of voters are actually the ones who (within the framework of a constitution, of course) get to compel other here and now – by electing them out of office. No organic tofu involved – as many of the opponents of nuclear power, including a lot of farmers in Baden-Württemberg would say regarding tofu – ‘Was der Bauer nicht kennt, isst er nicht’ Roughly, ‘A farmer does not eat what he does not know’ – which actually applies in a lot of ways in a place that was described a couple of decades ago as a Bundesland that votes black (CDU), but thinks green. These days, it is a place that both votes and thinks green, though that will undoubtedly change at some point in the future too.

26 Roger Sweeny January 9, 2018 at 9:40 am

So you’re saying that getting the German government to close nuclear power plants is like getting the US government to vigorously enforce immigration laws.

27 Harun January 9, 2018 at 5:19 pm

Except nuclear power is a good idea and very green.

Let me know when Germany has earthquakes or tsunamis.

So, again, it is like organic tofu.

28 Alistair January 9, 2018 at 7:15 am

It was more on the narrow point that environmentalists talking about Ultimate Entropy constraints are not _actually_ concerned about Ultimate Entropy constraints. That’s all.

29 clockwork_prior January 9, 2018 at 8:05 am

Sure, but anyone interested in the longer term is not necessarily also interested in forcing people to eat organic tofu.

This may be especially true in Germany, considering its history in connection with ensuring that profitable industries can continue to be profitable into the future – ‘Due to the increasing demands of the developing mining industry and the agglomeration of small cities, the original large and dense forests in this region in Saxony had disappeared. … The local mining chief, Hans Carl von Carlowitz had one major problem: the silver mines were far from depleted, but the mining industry needed wood (and a whole lot of it), and wood was becoming unavailable and unaffordable; it was in fact becoming so scarce that small industries were even at the brink of bankruptcy. ….

Von Carlowitz studied the problem thoroughly. With his wide knowledge of the literature, he had the ability to compare the forest situation in Saxony with that in other European countries. He was aware of innovative efforts undertaken elsewhere to develop new approaches and a more productive use of land in both agriculture and forestry. …

In 1713, one year prior to his death, von Carlowitz published his book Sylvicultura Oeconomica in which coined the term Nachhaltigkeit (“sustainability”) by referring to the concept of nachhaltige Nutzung (“sustained use”). He provided a definition for what became, in following decades, the basic concept of forest management:

“The greatest art, science, diligence and institution of these countries will rely on the manner in which such conservation and growing of wood is to be undertaken in order to have a continuing, stable and sustained use, as this is an indispensable cause, without which the country as we know it cannot survive.”

The flourishing economy has to serve the “common good“. Not only the subjects have the right to receive “plenty of food and livelihood”. The same right should also be reserved “for future generations”. He complains that people are short-sighted and only looking for their current profit instead of using “benevolent nature” carefully.’

30 Alistair January 9, 2018 at 5:33 am

You should also consider the possibility that our immature physics does not understand entropy/heat death well enough to pronounce on Ultimate Doom with total certainly. We may be wrong, and a Sufficiently Advanced Civilisation might find a way to _cheat_ it’s way out.

We’d really take a high regret payoff if there was a way out, but we missed it because we turned inwards and agrarian before being smacked by a comet fragment.

“Hey Zorg45222; remember the old days, back when people thought death was inevitable?”

31 Victor January 9, 2018 at 2:48 am

I’m just curious – do you guys ever get tired of Intellectual masturbation? What impact have discussions like this ever had on the actual real world? I get that your jobs are basically this, but doesn’t that depress you?

32 clockwork_prior January 9, 2018 at 4:10 am

‘What impact have discussions like this ever had on the actual real world?’

Julian Simon – enough said. Well, enough said when it comes to something like mountaintop removal as a coal mining technique, apparently. A modern economy can always find a way to satisfy its hunger for resources, it appears, as long as no one brings up any objections which can be translated into political restrictions, of course.

33 dearieme January 9, 2018 at 6:21 am

Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.

Keynes again.

34 VD January 9, 2018 at 11:31 am

Yes, but this isn’t remotely true.

35 DNA January 9, 2018 at 6:37 am

Here here.

36 Axa January 9, 2018 at 6:41 am

@Victor: wrong window, it’s no the ESPN Facebook site comment’s section.

37 Trump Fan January 9, 2018 at 9:35 am


38 Dick the Butcher January 9, 2018 at 11:33 am


Good point. Their ilk’s intellectual masturbation (IM) gave to the World ideas that spawned Lenin, Stalin, Mao, Hitler.

The IM crowd far outdid medieval alchemists with materials far more abundant and far less expensive than any base metal. They converted magic ink and special paper into money.

Truly, they are geniuses compared to the rest of us. Every time they fail and screw us, we give them and their ideas more power.

39 Pava Renat January 10, 2018 at 3:45 pm

Well, Victor, you have to understand that if you are addicted to intellectual masturbation, you constantly need to analyze whether you are doing it efficiently and get maximum satisfaction out of it. That is, in itself, a very noble pursuit — the pursuit of excellence in whatever endeavor you choose to engage. You need to practice, constantly, to ensure that your potential as a masturbator is optimized. Thus, always ask yourself whether your most pleasurable pursuit can be done to ever greater satisfaction. If you are going to be a jerk-off, be the best you can be.

40 mkt42 January 9, 2018 at 3:43 am

Tyler connects those four schools or models with environmentalism, but he should add Hotelling and the associated models of non-renewable resources. The standard ones combine Solow-type neoclassical models with assumptions of ultimate scarcity a la George or in a sense even Georgescu-Roegen (worrying about entropy is silly when the earth is an open not a closed thermodynamic system, and receives every day many times more energy than humans use).

And I think that’s still the best way to think about the various scarce and non-renewable or only partially re-newable resources on the planet, be it oil, clean air, potable water, or whatever. These are not infinitely available goods as assumed in the Solow model, indeed in the simplest Hotelling model there’s a permanently fixed supply of the resource.

But Ehrlich-style fears of running out of that resource are overblown, because a reasonably efficient market will cause the price to gradually rise and humans to gradually economize on their exploitation of that resource. Plus Simon-esque or Solow-esque technological improvements.

Underlying that happy outcome are Solow-type assumptions of goods being substitutable, contra George-type assumptions. But we’ve seen time and time again over the centuries that, to put is succinctly, “goods are more substitutable than you think”. We get a lot more bushels of wheat per acre than we did 40 years ago. And more GDP per joule of energy. The assumption that land or energy (or oil or water or whatever) is the key fixed and non-substitutable resource is an untenable one.

I.e. by adding Hotelling’s features to standard neoclassical models, we allow for the reality that certain natural resources are inherently limited or non-renewable. But we don’t get silly worries such as entropy or switching to a single tax.

That’s why I’m not intrigued by Charles Mann’s framework, at least as described by Tyler. Wizard vs Prophet is only one initial dimension for looking at environmentalism.

The limitation of the neoclassical model, and of relying on markets to solve these issues, is that the markets need to properly value all of the underlying goods and resources. When in reality we still don’t know the value of say an insect species in the Amazon that might play a key role in the ecological health of the Amazon basin, or the value of reducing carbon emissions to reduce climate change. Governments and regulators don’t know those values either, but they can potentially at least intervene to set aside conservation areas, protect species from extinction, etc.

Another still-unknown parameter is the value of increasing or decreasing the population. The simple neoclassical models say that if we reduce L then the capital-labor ratio K/L rises and so does per capita production. It’s clear that those models are overly simple. But does that mean that a higher human population is always better? It’s easy to come up with models, either Hotelling-esque or Erhlich-esque, where a smaller population will have a higher standard of living (or alternatively, use up the Earth’s resources more slowly). I think this is, for environmental economics, one of the most important open questions. It’s not a question of where to be on the Wizard vs Prophet scale, it’s a question of what are the determinants of the scale in the first place and how much can we shift those determinants.

41 clockwork_prior January 9, 2018 at 4:12 am

It will be interesting to see whether comment length has become a criteria in the new day that has dawned.

42 Alistair January 9, 2018 at 5:28 am

It’s reasonable that we may not sufficient price some ecosystem services and that this leads to negative externalities.

One point: Many currently non-renewable or only partially renewable resources may be entirely renewable for a Sufficiently Advanced Civilisation. Just because we (partially) rely on natural ecosystems to currently provide them doesn’t mean we will always do so. Indeed, the trend is clearly away from them: we are now _less_ reliant on natural ecosystem services as a proportion of GDP than ever.

Similarly, who is to say what level of control future engineers will enjoy over nature? There’s nothing magical about clean air and water or soil or ecosystems or anything. . A Sufficiently Advanced civilisation might just throw energy at mass and call the problem solved. You want a Rainforest basin? We can build one.

43 ʕ•ᴥ•ʔ January 9, 2018 at 6:46 am

This seems an entirely reasonable framework, and I am amused by the digs some want to get in against “environmentalists” in response.

If externalities are real, environmentalism is justified, at lower bounds.

44 Alistair January 9, 2018 at 7:21 am

> If externalities are real, environmentalism is justified, at lower bounds.

Yes. No problems with that. But how many environmentalists are happy with the idea of reducing pollution at the margin? How many can you even discuss the idea of _rational_ levels of pollution with?

45 ʕ•ᴥ•ʔ January 9, 2018 at 8:06 am

Some environmentalists are simple souls, but it is painting with a broad brush to make them the whole spectrum, rather than working in Ducks Unlimited or whatever.

46 Al January 9, 2018 at 11:21 am


47 ʕ•ᴥ•ʔ January 9, 2018 at 11:52 am

Man, we can count on you for the dumbest possible answer.

Some material for retraining your Artificial Intelligence:

48 DevOps Dad January 9, 2018 at 8:27 pm

The “lead-crime hypothesis” continues …

Has a randomized, double blind study ever been completed with mice, dogs, or monkeys to determine at what level, if any, lead exposure in air or smoke leads to violence?

The entries I’ve found in are old and don’t address the issue.

I spent my first 10 years living alongside the road between WPAFB and Dayton, Ohio and whose traffic > 5000 cars per day, have no history of violence and an MBA.

49 jorod January 9, 2018 at 6:54 am

Maybe it’s more important to be competitive, not just producing.

50 harpersnotes January 9, 2018 at 7:34 am

A critical mass/density of geniuses.

51 Sandia January 9, 2018 at 7:49 am

Breaking something that you are not sure you can fix is just not a very good idea.

52 clockwork_prior January 9, 2018 at 8:42 am

Yet the sentiment expressed by “Après moi, le déluge” seems universal to a certain type of person, even if they do not speak French.

53 Floccina January 9, 2018 at 10:47 am

“Breaking something that you are not sure you can fix is just not a very good idea.”

We are always breaking something that we are not sure we can fix so you must grapple with levels of risk, some we are willing to take and others we are not.

“As of the year 2000, about 37 percent of Earth’s land area was agricultural land.”

54 Jacob January 9, 2018 at 8:56 am

The constraint I’m worried about is the net primary productivity of the biosphere. This seems to combine aspects of George and Solow. Energy subsidies and land use changes allow us to modulate the NPP a bit, and tech changes allow us to extract a greater percentage of it for human use. It’s tough to measure, but right now we already use ~40% of terrestrial NPP, and climate change seems likely to cause the denominator to fall.

None of the economic models seem to handle rate of change very well. Perhaps we can substitute our way out of climate change and reach a new equilibrium eventually, but large shifts in population concentration and the layout of the agricultural system seem quite difficult on sub-generational timescales.

It probably makes more sense to speak about “resource” issues as economic rather than environmental. But it seems to me a lot of debates on environmental issues hinge on the extent to which the participants are willing to give non-humans (especially non-animals) any place in our moral calculus. While I don’t remember this being discussed in 1491, many indigenous philosophies include this, so it might be worth discussing with Charles C. Mann.

55 Dave Smith January 9, 2018 at 8:59 am

The sun pours energy on earth all the time. If entropy is the limiting factor, we have a long way to go.

56 ʕ•ᴥ•ʔ January 9, 2018 at 9:03 am

With current tech we are forced to use fossilized solar energy a lot faster than it is laid back down.

57 Brian Donohue January 9, 2018 at 10:09 am

The Stone Age didn’t end because we ran out of stones.

58 Kevin Erdmann January 9, 2018 at 10:29 am

I’m stealing that.

59 ʕ•ᴥ•ʔ January 9, 2018 at 10:42 am

Obviously “with current tech” is a qualification and not a limit. If someday we figure out how to bioengineer everything, we face only a carbon limit (and CO2 becomes a resource).

But we ain’t there, and we keep drawing down those “one time use” resources.

60 Brian Donohue January 9, 2018 at 11:24 am

In 1979, I was told in school that there was only 25 years of oil left, and I believed it.

38 years later, I am told there is only 53 years of oil left, and I don’t believe it.

Don’t even get me started on gas.

The only consistent theme is that the sandwich-board wearing prophets have no idea what they are talking about.

61 ʕ•ᴥ•ʔ January 9, 2018 at 11:49 am

People get their timeframes mixed up. They argue decades as if they were years, or centuries as of they were decades. Or the other way around.

No one in 1979 or 2018 should pretend a foolish confidence about 40 year futures, but one thing we can observe is slow changes to the energy portfolio.

Gasoline was and is the main transportation fuel, and the “run out of rocks” quote didn’t change that.

We didn’t get a magic hydrogen car or whatever on demand. There is no magic guarantee that you get any tech you want, just because you want it.

I mean, there are old and/or poor people in America with the heat turned down because they can’t afford it. Magic new energies have not come soon enough for them.

62 Brian Donohue January 9, 2018 at 12:10 pm

We will not run out of oil or gas in the next 40 years. How’s that for a foolish prediction?

Not as cagey as “we keep drawing down those “one time use” resources”, which sounds like a sage warning, but leaves precious wiggle room as to century etc.

Vague sandwich boards are the worst.

63 ʕ•ᴥ•ʔ January 9, 2018 at 12:18 pm

No one with any understanding of resources economics would use “run out” so why make that your strawman?

64 ʕ•ᴥ•ʔ January 9, 2018 at 12:23 pm

If you want to be a 40 year sage, name a price per barrel, or go home.

Not me, Taleb, anyone sane, we think such predictions are impossible.

65 Floccina January 9, 2018 at 10:48 am

At a little more cost we could use solar or nuclear.

66 RafaelR January 9, 2018 at 10:49 am

We should worry about entropy when humanity’s energy consumption becomes a substantial fraction of the energy output of all stars in the universe. I don’t think we should be worrying about it anytime soon…

67 ʕ•ᴥ•ʔ January 9, 2018 at 9:21 am

Tyler writes:

“My own view is that the ultimate scarcity in today’s system comes from what the political economy of our societies and polities can bear, but that must await another day.”

I am going to decode this to mean path dependence is underrated.

68 carpenter January 9, 2018 at 12:16 pm

Yawl been waxing a fine sheen on entropy and sustainability (Roy Blount ) and it leads right to this, ennit?

69 Roger Sweeny January 9, 2018 at 9:31 am

Sounds like something to ask Charles C. Mann about.

70 Trump Fan January 9, 2018 at 9:43 am

“For Georgescu-Roegen, the ultimate fixed factor is the laws of physics, due to entropy. Economic systems cannot receive an ongoing influx of both energy and matter indefinitely, and so eventually they reach limits to growth. At that margin substitutability breaks down and catastrophe ensues. To check this outcome, we must find a way to live with slower rates of economic growth, and eventually a zero or negative rate of economic growth.”

Why? Real gdp growth has been falling for decades, yet it doesn’t seem to have led to catastrophe. Why should I not assume that if growth goes to zero the same would happen?

71 Alistair January 9, 2018 at 8:16 pm

I don’t know. Politics is turning pretty Hobbesian in a low-to-zero-income growth setting.

72 Kent Guida January 9, 2018 at 10:45 am

This post is a great example of what makes MR so stimulating and so valuable.

73 Anon January 9, 2018 at 12:54 pm

This is my area, and in my view the debate has moved on from the Georgescasu to the really practical limits analyzed by Greenstone (temperature) and Solomon Hsiang and co-authors. This group of people is looking at wether there are hard limits to adaptation in various area, Ag being the most important and are taking the theoretical insights about ecosystem services and substitutability and seeing if there is evidence for them being practically relevant.

74 Alistair January 9, 2018 at 8:19 pm

Out of interest, in the Very Long Term, do you just think the scarcity of warm wet dirt is a limiter?

75 Prakash January 10, 2018 at 4:50 am

I believe in something very similar to Tyler’s comment. The ability of the political and economic institutions to be able to guide intelligences is somewhere near our biggest near term constraint. In the long run, its entropy, always.

For near term sustainability studies, I believe that something like the biosphere 2 experiment needs to be done over and over with all sorts of permutations, preferably in enclosed environments holding more than dunbar number of people, necessitating the use of money and other such stranger handling mechanisms. Only that will give us an idea of how much of what is absolutely needed in the ecosystem and what is the energy expenditure required to maintain civilization at a level of comfort acceptable to us. The ultimate result of course will be the blueprint of a von-neumann machine ecosystem that will carry human civilization to other places if something befalls us here. Repeating those experiments in a rotating habitat may also make a lot of sense.

76 GM January 13, 2018 at 6:15 pm

It’s really depressing to read the comment here, which are a fine testament of several of the many tragic dysfunctionalities of our society:

– I see a whole bunch of people who cannot comprehend that the economy is a tiny subsystem of the physical world, not the other way around

– The same people also cannot comprehend that the laws of physics are inviolable and drive everything around us while the “laws of economics” are primarily tools for ideological propaganda, not something that actually exists in the real world

– Speaking of ideology, I also see a lot of comments by people that are clearly under the same sort of influence by mainstream economics as medieval monks were influenced by Christian theology, i.e. it is taken to be true as religious gospel without any questioning of the underlying assumptions. And everything that contradicts it has to be false

– Finally, the level of scientific ignorance is breathtaking. Several people talked about how the Earth is not a closed system, therefore entropy is irrelevant and we can grow forever. Yeah, it isn’t a closed system, thankfully. But the flow of negative entropy is very much finite, and not that large at all, not to mention how diffuse it is. Not that this should matter that much, presumably people so deeply dedicated to economics are perfectly capable of calculating what exponential growth leads to given sufficient time, but apparently the implications of even a 1% growth rate going on for a couple million years are entirely lost. But who am I to point out such things, the almighty God/market will take care of it all…

77 Ramagopal January 13, 2018 at 9:26 pm

Tyler, you say “For … Edward Gibbon Wakefield … If you let people settle the countryside, you will have an underpopulated republic of deplorables — there is no substitute for city life! ” . However Wakefield’s “A View of the Art of Colonization ” gives the impression he advocated, as a solution to unemployment in Britain, movement of people from the then industrial districts like Liverpool and Manchester to uncultivated lands in England’s colonies. Where does he say there is no substitute to city life? Perhaps for him limits are imposed by availability to lands to colonise?

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