Saturday, June 6, 2009

A steady-state economy: Now or Later?

The Oil Drum has posted a Lecture by Herman E. Daly, "From a Failed Growth Economy to a Steady-State Economy". The question is, however is has the time for a steady state economy arrived? Daly writes
A steady-state economy is incompatible with continuous growth—either positive or negative growth. The goal of a steady state is to sustain a constant, sufficient stock of real wealth and people for a long time. A downward spiral of negative growth, a depression such as we are entering now, is a failed growth economy, not a steady-state economy. Halting an accelerating downward spiral is necessary, but is not the same thing as resuming continuous positive growth. The growth economy now fails in two ways: (1) positive growth becomes uneconomic in our full-world economy; (2) negative growth, resulting from the bursting of financial bubbles inflated beyond physical limits, though temporarily necessary, soon becomes self-destructive. That leaves a non-growing or steady-state economy as the only long run alternative. The level of physical wealth that the biosphere can sustain in a steady state may well be below the present level. The fact that recent efforts at growth have resulted mainly in bubbles suggests that this is so. Nevertheless, current policies all aim for the full re-establishment of the growth economy. No one denies that our problems would be easier to solve if we were richer. The question is, does growth any longer make us richer, or is it now making us poorer?
Well and good, but are we at a time when a steady state economy is in the offing, or is the earth capable of sustaining much more economic growth?

My answer would be from the viewpoint of energy and resources, no. In fact most of the earth's energy resource potential remains untapped, and thorium, the greatest potential energy resource remains entirely untapped.

There will be a limit to growth, a point at which we reach a maximum level of resource extraction, but that time is certainly not in the near future. There is, however an important resource limitation that occasionally is noted, but its full implications are almost never described, and that is the limitation of phosphate. The phosphate problem is far too important to ignore in a blog that describes itself as green, but today I will only note it in passing, and to note that I have no Idea what I will discover when I begin a case study of the economic impact of phosphorous limitations.

At the moment, however, I will focus on Daly's argument.

Fundamental to Daly's argument is the notion that the magnitude of human desire exceeds the magnitude of te earth's resources. This is a given in the Dennis Meadows/Jay Forester/Club of Rome tradition, and it is simply assumed, never proven.

Yet logically the earth's resources, although not infinite, could exceed the practical limitations of human desire. Take for example iron. No matter how much Iron people want, the potential to extract iron from the earth will always exceed the limitations of human desire for iron. Iron is exceedingly abundant, so it might be conceived of as an exception, but there are other resources that will never reach a steady state limit. Thus even a steady state economy will not achieve steady state utilization with all resources. Thus we can speak of limited and non-limited resources.

Advocates of a steady state economy typically suggest that there are only two types of resources, renewable resources, and non-sustainable resources, which are all in short supply. There are in fact three types of resources, non-sustainable resources, renewable resources and sustainable resources. Sustainable resources are resources that available with sufficient abundance that even a very large human population will never run out of them. World energy supplies in the forms of Uranium and Thorium are sustainable. The failure to recognize the existence of sustainable resources is the flaw on which the no economic growth philosophy rests. We cannot access what are the limits of economic growth until we assess what are our sustainable resources.

Substitution allows non-limited resources to take the place of limited resources, Substitution thus allows wealth to be expanded through the use of non-limited resources. In addition to substitution nuclear alchemy, that is material transmutation inside a reactor, will permit the expansion of certain material resources beyond the limitations set by nature.

I classify energy in the form of uranium and thorium as sustainable but not renewable, because they are recoverable with a favorable ERoEI, at average crustal levels of concentration. Given this potential, many minerals are recoverable at crustal concentration levels as a byproduct of thorium and uranium mining. Thus the case for growth limitations is far weaker than Daly suggests. The entire argument rests on a set of cognitive errors. The first is the untested assumption that peak oil is typical of all resources, and that peak oil is really peak everything. This is an example of the fallacy of composition, the belief that what is true of a part is true of the whole.

In fact some non-sustainable resources will still be available for a long time to come. Sustainable resources can in many cases be substituted for non-sustainable resources, while non-sustainable resources can be supplied by recycling. Small amounts of non-sustainable resources can be obtained through the nuclear transmutation produced by nuclear fission, while even smaller amounts of resources can be obtained through the nuclear transmutations of sustainable materials in transmutation technologies.

There are 40 trillion tons of Uranium in the earth's crust. There are at least 120 trillion tons of thorium in the crust, 1500 tons or uranium and thorium will supply the United States with its entire energy needs for a year, while 750 tons will supply the energy efficient Western Europe. 15,000 tons of uranium and/or thorium will supply the entire population of the earth with energy at near Western European levels. This means that in a billion years we will have used 15 trillion tons of uranium and/or thorium, or about 10% of the amount on the planet. The world will be gone long before the other 90% is used. it is a serious logical error to appeal to your own ignorance as proof that something is not the case.

In a paper titled THE AGE OF SUBSTITUTABILITY. H. E. Goeller and Alvin M. Weinberg, discussed the sustainablity of resources. They quote geologist Dean F. Frasch; said in 1962, "Total exhaustion of any mineral resource will never occur. Minerals, and rocks that are unexploited will always remain in the earth's crust."

Writing in 1975, Goeller and Weinberg maintain:
"Actually, we can conceive of depletion of resources and substitution
in three stages. Stage I is a continuation of our present patterns of use of our non-renewable resources; this almost surely will persist for the next 30 to 50 years. In Stage 11, the society still would depend on reduced C and H found i n nature, i .e. , coal, there wound be 1ittle oil and gas, and people would begin to turn away from widespread use of a few of the non-ferrous metals and toward much greater use of alloy steels (A1 , Mg, and Ti). Stage I1 might last several hundred years. Finally in Stage 111, the truly asymptotic "Age of Substitutability",
all the fossil fuel would be gone; the society would be based almost exclusively on materials that are virtually unlimited. It.is our basic contention that, insofar as limits to mineral resources can be discerned, the condition of life in Stage 111, the Age of Substitutability, will not be drastically different from our preserlt condition of life."
Goeller and Weinberg identify certain sustainable resources, air, salt, sand, limestone, water, as well as huge amounts of iron, aluminum, potassium, and other minerals. These are sustainable raw materials. We have enough raw materials to sustain economic growth or a long time. Daly does not assert that we are running out of resources yet, although he seems to hint that we might be. Daly is weak on the sort of facts that are Goeller and Weinberg's strength. A look at the facts would reassure anyone who wonders that we are no where near out of resources yet. We have enough resources to make the people of China and India and Africa and Latin America all rich without reaching the place where we cannot sustain development. We well reach the point of a steady state economy some day, but that day is not today or tomorrow.

Thus Daly argues for a cap and trade system for resources without determining if that system is needed for all resources. Daly acknowledges that we may not be out of resources, but argues that we should act as if we are. It is quite likely that some resources may someday require a system of allocation, while others would not. Daly does not help us understand what resources we may need to allocate, or when we might need to allocate them. This is not helpful. Resources might require an allocation system some day, but we have no facts to say that is now.

7 comments:

DV8 2XL said...

This view of a steady-state economy would see us becoming what ancient Egypt was, a stagnant culture unchanged for thousands of years. It would by necessity have to actively suppress innovation in both the technical and social spheres. Doubtless too in would have a fixed class structure as well, because anything, anything at all that forced the slightest change would destabilize the balance which this tpye of system would need.

I would rather see this civilization crash and fall, than condemn future members of the human race to be caught in this amber.

Soylent said...

"A steady-state economy is incompatible with continuous growth—either positive or negative growth."

There will always be technological advances. There will always be a need to build the factories and other capital that implement them in the real world. There will always need to be some mechanism to continually evaluate whether the new technology is better in the real world(market mechanisms are quite good at this).

There will always be financial, human and natural disasters. There will always be new crop pests and new diseases, new resistances to old methods of fighting them.

A steady state economy without continuing growth is incompatible with human civilization. You have to at least keep jogging to stay in the same place.

Charles Barton said...

There would be more than one vision of a steady state society. Steadty state might refer to the fact that certain minerals mainly become available through recycling, rather than mining. however there is a question about exact what resource exhaustion actually means. It turns out that some resources that are not sustainable, may be renewable given enough time. OLne of the problems is a mismatch between human needs and global cycles.

Warren Heath said...

If phosphates will be in short supply, why are the Greens, Obama/Chu & the EU supporting the massive expansion of biofuel production - rapidly depleting phosphates, fresh water and topsoil? Not to mention agricultural runoff pollution, food shortages, destruction of natural ecosystems & carbon sinks, and increased use of fossil fuels for agricultural inputs.

Hat tip to George Carty for an excellent video describing the Greens / EU environmental plan – a complete disaster – I would call it a crime against humanity.

The destructive effects of the European Union’s dastardly environmental plan

Charles Barton said...

Warren Heath, I have repeatedly pointed out that biofuels mine the soil. To there credit there are some environmentalists who know this. But many environmentalists are so ignorant, that they do not understand that soil conservation is an environmental issue.

George Carty said...

Don't thank me for the video, thank the UK Independence Party...

donb said...

The "steady-state" scenario is an invitation to war. Either the status quo of rich and poor countries is maintained (which would cause the poor to make war on the rich), or the wealth of the rich countries is distributed to the poor (which would cause the formerly rich to make war on the poor).

The way out of this dilemma is bring up the standard of living of the poor countries (which means, ahem, growth). Abundant, economical energy is a key technology to do this, and nuclear is the key to this energy.

Having abundant energy is a game changer. With lots of energy, resources can be recovered that otherwise would not be economical, of can be done much better. Take for example liquid hydrocarbons. We will need them for a long time to run things like aviation. While I am not a big fan of biofuels, biofuels could be done with less impact on the environment if nuclear process heat were used.

Charles Barton wrote:
Thus Daly argues for a cap and trade system for resources without determining if that system is needed for all resources. Daly acknowledges that we may not be out of resources, but argues that we should act as if we are. It is quite likely that some resources may someday require a system of allocation, while others would not. Daly does not help us understand what resources we may need to allocate, or when we might need to allocate them. This is not helpful. Resources might require an allocation system some day, but we have no facts to say that is now.

We already have a resource allocation system. It is called price.

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