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An Energy-Based Economic Model: Nature

by: Paul Kando

Since ancient Greece, the word "economy" has meant "management to ensure adequate provisions to a community". Since the resources managed are material goods and energy, a real-world economy is subject to natural laws that matter and energy are subject to. Yet mainstream economic theories ignore that while energy and matter are conserved, entropy increases. This would be irrational, but for the fact that mainstream economists concern themselves only with managing money.

microscopic image of soil crawling with miniature life
photo credit: U.S. Dept. of Agriculture

What about the real economy? The US ranks highest among advanced countries in per capita CO2 emissions and ecological footprint. We have the highest high-school dropout rate and military spending. As a percentage of GDP, we spend the most on health care but the least on international development, humanitarian assistance and domestic social programs. We rank at the bottom in life expectancy, infant mortality, mental health, obesity, maternity leave, paid vacations, the well-being of children, inequality and poverty. The top 1%'s income is greater than the bottom 180 million Americans' taken together. Something is amiss.

Our material economy is embedded in society and society is embedded in nature's life support system. We can theorize, but cannot understand or manage it without understanding the whole interconnected system. A balance of four basic types of assets is necessary for sustainable human well-being: the built environment, and human, social and natural capital. Financial capital is only a marker for real capital and must be managed as such. Growth in material consumption is ultimately unsustainable because of fundamental planetary boundaries and the law of entropy.

A better economic model is all around us. Take a walk in the woods. Running on sunlight, nothing there uses more energy than it needs. What's produced is recycled. There is only abundance, no austerity. Diversity is prized, there are no monocultures. Form fits function: leaves, trees, ponds, bugs, salamanders, are at once beautiful and functional. No need for imports: nature relies on local expertise. Birds and squirrels know how to build nests. Leaves know how to use sunlight to combine carbon dioxide and water into sugar. Flowers proffer the sugar to bees. In return, a new generation is pollinated into life. Cooperation is everywhere. A handful of soil is a plethora of tiny organisms working together. Excesses are curbed from within — when milfoil or kudzu-vine take over, it's a sign of human meddling. There is growth everywhere, part of repeated cycles of birth, growth, death and re-birth.

Contrast this with the linear resource flows of what passes for human economy, from extraction, through marketing and consumption, to dump. What folly to assume an infinite supply of energy and raw materials at one end and an infinite sink on the other, to warehouse (often toxic) wastes. What self-deception to "externalize" responsibilities onto society and finite planet, pretending they went away! Can an economy endlessly grow, even as it frets about fiscal austerity?

The forest inspires an economy consonant with the laws of nature. There is plenty to go around. Indeed, it is only money — a medium of exchange puffed up into chief arbiter of value and created at will by bankers — that seems always to be in short supply. Born with the capacity to think, analyze, imagine, and create, can we create a new economy that counts on the creative genius of every member of society, instead of hierarchies of "experts"? Can we create an economy that, consistent with the original meaning of this Greek term, "manages our household", instead of just a tiny minority's virtual wealth of money?

Why not? We can build houses that use zero energy and even produce a surplus; travel using electric vehicles running on rail and road, on power supplied by sun and wind; make wall to wall carpets completely recyclable back to raw materials. We know how to recycle almost anything or devise alternatives for things we cannot. We can retrieve and exchange knowledge at will from the Internet and collaborate worldwide without leaving our chair. We know how to produce food, clean water and indoor comfort on urban rooftops. We can manufacture useful objects by three-dimensional printing and even combine carbon dioxide and water into carbohydrates, much like plants do, to produce renewable fuels.

It takes re-thinking the customary and applying old skills in new ways to create an economy harmonious with nature. It takes recognizing that making money is one thing, creating better ways to deal with real-world problems is another. Human labor can be an act of creation, not just a commodity for sale.

That Germany, Sweden, Denmark, among others, are well on their way to displace their fossil fuel and nuclear industries with solar electricity, ending the dominance of companies that ruled the economy for a century, only proves that this can be done. A tired old extraction industry can be displaced by modern electronics and information-technology in a new bloodless wave of a revolution that already brought us personal computers and the internet. Solar energy, like nature, is decentralized and based on a world-wide commons — sunlight. With fossil fuels and nuclear displaced, a new energy economy modeled on nature can become the key to countering (and adapting to) global warming, avoiding senseless wars over dwindling resources, from fossil fuels and rare metals to fresh water and breathable air.