ourfiniteworld | The very thing that should be saving us–technology–has side effects that bring the whole system down.
The only way we can keep adding technology is by adding more capital
goods, more specialization, and more advanced education for selected
members of society. The problem, as we should know from research
regarding historical economies that have collapsed, is that more
complexity ultimately leads to collapse because it leads to huge wage
disparity. (See Tainter; Turchin and Nefedov.)
Ultimately, the people at the bottom of the hierarchy cannot afford the
output of the economy. Added debt at lower interest rates can only
partially offset this problem. Governments cannot collect enough taxes
from the large number of people at the bottom of the hierarchy, even
though the top 1% may flourish. The economy tends to collapse because of
the side effects of greater complexity.
Our economy is a networked system, so it should not be surprising
that there is more than one way for the system to reach its end.
I have described the problem that really brings down the economy
as “too low return on human labor,” at least for those at the bottom of
the hierarchy. The wages of the non-elite are too low to provide an
adequate standard of living. In a sense, this is a situation of too low
EROEI: too low return on human energy. Most energy researchers
have been looking at a very different kind of EROEI: a calculation based
on the investment of fossil fuel energy. The two kinds of EROEI are
related, but not very closely. Many economies have collapsed, without
ever using fossil fuel energy.
While what I call “fossil fuel EROEI” was a reasonable starting place
for an analysis of our energy problems back in the 1970s, the
calculation now gets more emphasis than it truly deserves. The limit we are reaching is a different one: falling return on human labor EROEI,
at least for those who are not among the elite. Increasing wage
disparity is becoming a severe problem now; it is the reason we have
very divisive candidates running for political office, and many people
in favor of reduced globalization.
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