I was recently asked to be a keynote speaker for World Management Conference (WMC 2023) in Patna, India. The academic group that asked me to speak was particularly concerned about Complexity and Sustainability. A PDF copy of the presentation is available at this link.
The primary things I pointed out to the group were the following:
- The slower the growth, the more sustainable an economy is over the moderately long term.
- Energy consumption and the use of complexity tend to rise together.
- Too much complexity can lead to collapse.
- In general, the most “efficient” economies can be expected to do best.
- Over the long term, all economies will collapse.
- There have been shifts in which economies get a major share of available energy supplies. Shifting patterns are likely again in the future.
- India may come out ahead in an energy squeeze because its warm climate and conservative culture allow its energy consumption per capita to remain low.
A great deal of my presentation was simply a restatement of the words on the slides, in a slightly different way. So, my comments on the slides will be quite brief.
Of course, after complexity solves problems, population continues to grow, creating a similar problem all over again. This likely leads to the need for even more complexity.
My crude drawing represents the difference between slow growth in population and fast growth in population. Rapid growth is difficult to sustain for very long because arable land and fresh water don’t grow.
There is a similar problem if fossil fuel energy is being used. If growth in consumption is very fast (for example, China’s growth pattern starting in 2002), it becomes impossible to keep up the pattern. There can be two different problems: (a) Running short of fuels, leading to the need for higher-cost extraction and/or imports, and (b) Overpromising in the financial markets, leading to debt defaults and stock market crashes. China seems to be encountering both difficulties, even though its population is falling, rather than growing.
Organizing workers to plant and harvest crops represented a major step up in complexity, relative to hunting and gathering.
A metal tool, such as the one shown on Slide 5, greatly helped the productivity of farmers compared to using a sharpened rock or a piece of wood as a tool, or using only bare hands.
Of course, this list of uses is very incomplete. For example, both coal and natural gas are burned to create electricity.
As an example of a) above, a metal shovel allows more food to be grown. Food is, of course, an energy product that humans eat. Another example would be better drilling approaches that allow more oil to be extracted from a well.
Regarding b), greater complexity makes cars more fuel-efficient cars, making the cars less expensive to operate. This makes them more affordable, so more people can afford to buy them. This is known as Jevons’ Paradox. Although the devices look more efficient, the fact that more people can afford them allows the total amount of fuel used to increase.
Item c) relates to adding “buying power.” If more people can afford goods because of more government spending or more government debt, the added buying power keeps the demand, and thus the prices, of energy products up higher than they otherwise would be. The higher prices motivate businesses to extract harder-to-access energy resources that might not be profitable to extract if the prices were lower.
We extract the least expensive to extract oil, coal, or natural gas first. Even if our techniques get better, at some point, the price of fossil fuels used in growing and transporting of food becomes unreasonably high. Poor people, especially in low-income countries, have a hard time affording an adequate diet.
Slide 14 shows a chart I put together to try to explain the physics-based way economies are built. In a way, they are built in layers, with new businesses being added at the top, over old businesses, and new laws being added to old sets of laws. New human customers are added, too, and some die or move away.
Every action that contributes to GDP requires energy of some kind. It could be human energy powered by food, or human energy plus fossil fuel powered energy. Moving a truck or train requires energy. Even moving electrons, as in heating food or transferring electrons…