Economy as if energy matters. The work of economist Tim Morgan
Economists who are not "energy blind", i.e. who take energy questions and Peak Oil into serious consideration, and let energy questions penetrate their thinking, i.e. have a holistic sense of economics (because, in fact, as peakoilers use to say, "energy is the economy", not money and finance), are rare on this planet. I have followed many economic blogs for a long time, but I have to this day only encountered a few. "My most beloved economist", Chris Martenson on Peak Prosperity, is one. Steve St. Angelo on SrsRocco Report is another. Tim Watkins on the blog "The consiousness of sheep" is a third. Gail Tverberg on the blog Our Finite World is a fourth. I will now mention a fifth, an often overlooked one, of which I have not spoken much about on this blog. It is Tim Morgan on the blog Surplus Energy Economics The home of the SEEDS economic model – Tim Morgan. I have followed his blog sporadically for a long time.
Morgan is a very independent and original economist, who has developed an own economic model in his treatment of economics, the SEEDS economic model, SEEDS meaning Surplus Energy Economic Data System. In this model he calculates the ECoE (the Energy Cost of Energy) of the economy, which he lays as the foundation of his economic thinking.
In his last blogpost, "Behind the crisis" on his blog, from 29.9.2022, Morgan writes:
"Driven primarily by depletion, the ECoEs of fossil fuel energy have been rising exponentially. Since oil, gas and coal still account for more than four-fifths of total energy consumption, much the same has happened to overall trend ECoE. This has meant that aggregate prosperity has stopped growing, and prosperity per capita has already turned down."
End quote. Probably the ECoEs will continue to rise exponentially, so the fall of civilization will be abrupt. It is the last phase of an exponentially rising phenomena that takes us by surprise. It is really difficult to understand the exponential function. Physicist Albert Bartlett said famously: "The greatest shortcoming of the human race is its inability to understand the exponential function"
In 2013 Morgan published a book of 180 pages called "Life After Growth: How the global economy really works - and why 200 years of growth are over" which can be bought at Amazon. If you are an economist, and have money, I really encourage you to buy it. After you have read it, you will think about economics primarily in energy terms.
Here is the presentation of the book at Amazon:
"Why, years after the banking crisis, is the global economy still mired in recession and burdened by enormous debts? Why have the tried-and-tested economic policies of the past failed us this time?
In Life After Growth, leading City analyst Tim Morgan sets out a ground-breaking analysis of how the economy really works. Economists are mistaken, he argues, when they limit their interpretation of the economy to matters of money. Ultimately, the economy is an energy system, not a monetary one.
In Life After Growth, leading City analyst Tim Morgan sets out a ground-breaking analysis of how the economy really works. Economists are mistaken, he argues, when they limit their interpretation of the economy to matters of money. Ultimately, the economy is an energy system, not a monetary one.
From this, it follows that we need to think in terms of two economies, not one - a 'real' economy of work, energy, resources, goods and services, and a parallel, 'financial' economy of money and debt. These two economies have parted company, allowing the financial economy to pile up promises that the real economy cannot meet.
Starting with the discovery of agriculture, Tim Morgan traces the rise of the economy in terms of work, energy and resources. The driving factor, he explains, has been cheap and abundant energy. As energy has become increasingly costly to obtain, the potential for prosperity has diminished, to the point where growth in the real economy has ceased.
An immediate problem is that our commitments - including debt, investments and welfare promises - cannot be honoured, which means that we can expect the financial system to be wracked by value destruction. At the same time, we need to adapt to a future in which prosperity can no longer be taken for granted."
