Towards an energy Based Monetary Unit, free of Usury.
Introduction to Technocracy – 1933
discussions — of ‘value,’ of fluctuating prices, of the gold standard, of changing interest rates, of items of pecuniary wealth which are at the same time items of debt — are
merely discussions looking toward a readjustment of the factors which prevent them
The problem of analysing political choices against the metric of a Monetary measure is the Money as a Thing is most certainly a Variable and as any good technologist, scientist or metrologist will tell you a unit of measurement has to be clearly defined and fixed.
The dollar. He notes that it is a variable. Why anyone should attempt, on this earth, to use a
variable as a measuring rod is so utterly absurd that he dismisses any serious
consideration of its use in his study of what should be done.
He also considers ‘price’ and ‘value’ and the fine- spun theories of philosophers and
economists who have attempted to surround these terms with the semblance of meaning.
These terms, like the monetary unit, may have had meaning to men in the past but they
mean nothing whatsoever to the modern technologist. The standard of measurement is
not relevant to the things measured; and the measuring rod and the things, measured as if
they were stable, are all variables.
Incorporating energy into production functions
Quesnay’s famous but neglected “Tableau Economique
” therefore described the agricultural sector as “the productive sector” and manufacturing as “sterile”—see Figure 1.
Figure 1: Quesnay’s “Tableau Economique
”, first drafted in 1759, two decades before Watt’s steam engine
This was a justified assertion at the time, given that the Physiocrats wrote before the Industrial Revolution—and in particular the widespread exploitation in manufacturing of stored solar energy in fossil fuels– and originated in France, which was then overwhelmingly a rural nation.
Smith, who was influenced by the Physiocrats and wrote in Britain when industry was starting to exploit fossil fuels
(specifically coal) on a grand scale, could have corrected this oversight. But rather than following the Physiocrats’ lead on energy, Smith instead saw labour—not energy—as the font of wealth (which he described in the same terms as Cantillon: the “conveniencies of life”), and ascribed the increase in productivity over time to “the division of labour”:
The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniencies of life which it annually consumes, and which consist always either in the immediate produce of that labour, or in what is purchased with that produce from other nations…
The greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity, and judgment with which it is anywhere directed, or applied, seem to have been the effects of the division of labour. (Smith 1776, An Inquiry into the Nature and Causes of the Wealth of Nations
Economics thus lost the Physiocrats’ focus on energy, and instead descended first into the “Labour theory of value” and then into the Neoclassical (and Post Keynesian) notions of “production functions” in which energy played no role at all.
August 17, 2017 at 12:01 pm
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Solar Breeders are an interesting question regarding renewables. Thorium Nuclear is also an interesting question.
Pricing in Energy and not Cost of money ( Internal Rates of return vis cost of capital is not a new Thing.
Soddy was alive to it and it figures in the 1932 book Technocracy.
EROEI under rapid growth
A related recent concern is energy cannibalism where energy technologies can have a limited growth rate if climate neutrality is demanded. Many energy technologies are capable of replacing significant volumes of fossil fuels and concomitant green house gas emissions. Unfortunately, neither the enormous scale of the current fossil fuel energy system nor the necessary growth rate of these technologies is well understood within the limits imposed by the net energy produced for a growing industry. This technical limitation is known as energy cannibalism and refers to an effect where rapid growth of an entire energy producing or energy efficiency industry creates a need for energy that uses (or cannibalizes) the energy of existing power plants or production plants.
The solar breeder overcomes some of these problems. A solar breeder is a photovoltaic panel manufacturing plant which can be made energy-independent by using energy derived from its own roof using its own panels. Such a plant becomes not only energy self-sufficient but a major supplier of new energy, hence the name solar breeder. Research on the concept was conducted by Centre for Photovoltaic Engineering, University of New South Wales, Australia. The reported investigation establishes certain mathematical relationships for the solar breeder which clearly indicate that a vast amount of net energy is available from such a plant for the indefinite future. The solar module processing plant at Frederick, Maryland was originally planned as such a solar breeder. In 2009 the Sahara Solar Breeder Project was proposed by the Science Council of Japan as a cooperation between Japan and Algeria with the highly ambitious goal of creating hundreds of GW of capacity within 30 years. Theoretically, breeders of any kind can be developed. In practice, nuclear breeder reactors are the only large scale breeders that have been constructed as of 2014, with the 600 MWe BN-600 and 800 MWe BN-800 reactor, the two largest in operation.
P.s, I am not a big fan of the sophistry approach to Patreon. It is not a good way to encourage an Economics Commons, another contradiction of Capitalist apologists.
pretty sure the model does not include the energy use per head in the countries that actually produced what we used, and fractionated it for the energy use that went to domestic market, and the export market, and the cost to deliver goods across an ocean, truck them to stores, and into the hands of final consumers. And since the earth is a closed loop, we should count the energy cost of post-consumer recycling, and taking refuse to the landfill.
extremely interesting and beautifully elegant implementation. my profs always waved away A which was the interesting part of the story of production! i will be sure to send this on
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