Friday, August 23, 2019

Falling net energy, capitalism, and harsh degrowth

Economists have not understood the connection between physics and the economy. There is a need for a sufficient quantity of affordable energy products every moment of every day. In fact, we seem to need a vastly increased quantity of inexpensive-to-produce energy supplies right now if we are to fix the world economy’s problems from an energy point of view. The “lower interest rates and more debt” way of hiding problems seems to be reaching an end point. If nothing else, interest rates today are close to as low as they can go.

Since 2005, when conventional oil peaked, we have been in a situation where energy prices are too low for producers and too high for consumers. A normal biological reaction to less energy input is to reduce growth. But because of capitalism, the human species tries to violate this principle and continue growing. This can only be temporary until the laws of physics enforce harsh degrowth.