I know, I am supposed to be on blog break. But Jerome challenges on the question of energy policy. Since I've written on how America can Implement a national energy directive, it seems time to revisit the matter.

Solving energy as problem is impossible. Energy is one of the fundamental inputs to society, and one of the bottlenecks. Human beings will expand until they begin to reach a bottleneck, and it is entirely possible, at any given time, that energy will be the first one they reach. There is an energy crisis now, because peace and prosperity - outside of Africa we are not in a particularly conflict ridden era - have brought a rapid expansion in population, and the end of the Cold War has brought a vast wave of people who want to enter the global affluent economy.

This has happened before - namely in the transition of the coal age to the oil age - and the attempt was made by various parties to keep others out of the circle of affluence. At the time there was far from sufficient technology to do otherwise. The result was the most brutal upheaval in history, and one comparable to the great migrations that brought an end to the ancient world. As Keynes noted, without hyperbole, "failure has a precedent, it was called 'the Dark Ages'."

Energy, then, is going to be an on going project in society. It will not be "solved". The right wing wants to frame this as a problem that can be solved, because then they can get a great deal of money to "solve it", until the next time it needs to be "solved".

The answer to energy as a crisis is a simple triangle:

  • Supply
  • Demand
  • Money

To deal with the problem requires a realization that that supply, demand and political economy must all be addressed in a balanced fashion. We must increase the supply of energy, we must reduce the demand for energy, and we must alter the balance between energy and economic choices. All three must be approached, because if one is addressed and not the others, the energy added, or saved, will simply be dropped into more converting of distance for land. In short, saving a barrel of oil/day will simply outsource one more job to China.


In economics, supply doesn't simply mean "more". It is an increase in supply if you find a substitute. The reactionaries are proposing more extraction to deal with supply problems. Because of two problems - peak oil and global warming - extraction of hydrocarbons will not work. In fact, they have a feedback loop: the more optimistic your projections of peak oil are, the sooner global warming gets bad. Considered together, the basic mathematics of peak oil and global warming almost rule out extraction as a solution, except under conditions of massive austerity, and the Katrinafication of a large number of coastal cities.


Demand again doesn't simply mean reducing the amount of energy that people use. Demand can also be substituted. Engage in an activity that makes you just as happy, but uses less energy, and "demand" has been reduced.

The other way to reduce demand is "recession rationing". This has been the American policy for the last 30 years. Just let energy get expensive, and people will be destroyed by the resulting recession, and use less energy. In the US, energy outputs go down only in response to recessions. The last wave of conservation was 30 years ago.

This is tied with racism. Racism is the means of enforcing recession rationing without making a large number of people willing to rebel. If only a small class of easily identifiable people bears the brunt of being outside the affluent sphere of the economy, the people who are not in this class will breath a great deal easier. There is economic utility in having a visually simple system for determining who is "in" and who is "out". Hence "race".

The Kennedy-Johnson years saw a vast drop in poverty and in racial imbalance in access to the basics of affluent life. It was no longer possible to simple "keep the niggers out". The Republican Party became the home to the people who could never quite accept this.

There is a complex economic discontinuity argument for why this works in practice that I won't bore people with the details of here.

Thus there will be a long political conflict between those who want to spread the pain equally, and those who want to focus it on an easily identifiable group of people, of which they are not members.

The ugly reality of this problem is that it is not about "the corporations" or "the rich". Energy demand problems are, overwhelmingly, problems of economic peer competition, or "class civil war". While a rich person uses more energy personally than you do, the energy density of his consumption actually goes down.



The underlying engine of the supply and demand problems, however, is not the technical problem of supply itself, nor the problem of demand, it is that in any policy there will be those who expend money to increase supply or decrease demand. There will be those who benefit from those increases in supply and decreases in demand. Under our current economic system, these two groups of people are, largely, not the same.

In a market economy, people naturally do what they can recapture the rewards of. However, if the political economy doesn't for a closed loop - that is, the rewards don't go to the people who do the work - then people don't do it. The extractive economy is not the most efficient answer to our problems, but it is the one where the winners know who they are. Because oil is a physical good, with a physical chain of progression, it is easy to recapture the profits of it. I have the oil, I sell it and you pay me money or I keep the oil. However, release an open source software project to the world which saves people days of work - energy saved - and you recapture little/none of that value. There's no chain of possession, and no one is ever put in the position of "make a choice".


The solution is also three fold.

Capital Energy

Right now we extract energy. We find energy rich "stuff", we dig it up, and we sell it. Even some seemingly "renewable" sources are extractive. Water for example. What you are consuming is concentrations of gravity driven water. In the 18th and 19th century they ran around Europe and the United States, looking for "inches of head", or distance that water fell and therefore could be damed or milled appropriately. There were also a series of inventions to wring even more energy out of the same drop. The ancestor of the turbine was one of them.

We must rapidly move to a system where the focus of energy supply is using capital - technology, systems and organization of activity - rather than on extraction. It is this, and not "alternative" or any other buzzword, which should be the focus of thinking: how to we create capital for creation of energy. As I've noted before this requires moving to a five phase energy system.

The next fifty years are going to see a massive rebuilding of the energy system. However, what is the point of doing this if the result is simply to move production to nations that still use cheap extractive energy?

A New International Monetary Order

This is the part that has to be re-explained over and over again, because people grasp it intuitively, but not in theory.

Much of energy demand is not really demand. It isn't being done because it makes anyone happy. It's being done because it is cheaper than renting land close to where you want to be. There isn't a demand to commute an hour each way in heavy traffic. Almost no one wants this. However, the jobs are concentrated, and housing near them is expensive. Thus people drive farther to get cheaper houses. Producers do the same thing. It is less energy efficient to have "just in time" inventory control. However, land near where people buy things is expensive, so it is cheaper to store things far away, and have only small supplies on site.

The problem with crude means of correcting this - say $9/gallon gasoline - is that the trade of energy for land price is the most inelastic of demand. That is an econogeek for "people won't stop doing this". In order to get at the land/energy trade off you have to bury just about all regular consumption in the cold cold ground. This will make people unhappy. Unhappy people vote for a change in government.

The correct solution is alter the basis of the monetary system so that this trade off is far less attractive than currently. This is a complex change, so it is harder to explain, but the essence of it is that the weight of land prices are strangling the economy.

And this is something that is economically populist, because it is an issue of "haves" and "have nots". This is where the current monetary order is, in fact, designed to produce a great deal less prosperity, as people fight over who gets to fund right wing think tanks. A wealthy person doesn't use a great deal more energy than a merely well off person, but he does warp the market a great deal more. This was noted by Adam Smith back in 1776 - that as soon as the market asserts itself, there will be a conspiracy to buy the market, and that conspiracy will manifest itself in government. If you want to know what Smith's warnings out government were about, look at George W. Bush.

The Sphere

Over and over again I have written how it is essential to change the way our society flows and not merely attempt to take out a club of regulation, or a carrot of tax cuts. There is a change in world view which is as fundamental as the shift from the Victorian to the Modern - it will change cloths, manners, literary and artistic norms, social organization and tastes - as much as the dry details of policy. To live in a post-extractive world will mean a fundamental shift on what "looks right". As Christopher Lydon puts it "there is a shift in consciousness coming".

At the root of this is understanding that there are three mechanisms for storing economic information - the government, the market and the society. The 20th century reduced the last to an outgrowth of the first two. This meant that culture became a means to motivate people towards government, or towards consumption. It also meant that rather bizarre kinds of culture could arise, since it was no longer seen as connected to the whole of society. I am speaking particularly of the death cults that have arisen in the Islamic world and in America. Cults which hate the very technological basis of the society that they live in. While some of these are luddite cults of the left - the vast bulk, and the most dangerous politically and socially, are on the right.

The restoration of society as a coequal means of transmitting information is made possible by digital means. Let me take an example. A musical score is a series of instructions, they have to be played. Once upon a time, you had to move a lot of protons around to get that information out, and you had to move even more to deal with the layers of filtering. Digital signal processing makes it possible to create the sound and disseminate it. Community makes it possible to filter it, and amplify it. This system replaces the pyramid system of picking someone out of the hat, pushing protons around to make the music, shipping it physically, and then bribing people to put it on the radio, and put the posters in the music store. In short, community makes it possible to perform the role that a record company had, at a fraction of the price.

However, the problem is that presently both the creators and community members in such a system do not get very much of that savings. Instead it is internet service providers, computer manufacturers, Microsoft and other "gate keepers". This is because one can "recapture" the computer value: no computer, no community. No one person can charge for the community, and even if they can get funding to do it, this is much less than the recapture of hardware. Gates makes more money a day than Markos makes a year.


The problem of energy is a manifestation of the end of extraction and enforced scarcity. There will be others to follow it, as the world of extraction reaches its limits and the era where prosperity was a small bubble ends. This is a good thing - the 20th century killed probably a billion people in pursuit of maintaining that system, and kept many more in misery. However, this is not a case where some evil person is preventing utopia - it is that we have set up society to encourage it. Energy policy is going to have to pursue three prongs - reduction in demand, increase in supply, and a change in political economy so that efforts are rewarded.

The three major prongs of attack are to move to a capital rather than extractive energy system, realizing that we are going to have to replace components of it as time goes on - create a new monetary order which is based on sustainable, scaleable and accessible system - and changing the structure of society so that people will live within the new shape of how will will support continued human existence.

The alternative is temporary prosperity for some - we have perhaps half a generation left - and then a series of ever escalating cataclysmic conflicts over extraction, of which Iraq is merely the Boer War to the coming First World War.

The core is that we face the end of extraction. The extractive economy rewards people for finding things to extract, and extracting them. This is called "property". This model is so pervasive that we even turn cultural goods into an extractive model. Our entire financial system looks at everything as an oil well that will run out one day.

To change this requires changing how we see ourselves. Instead of being miners extracting value from society and the world, we have to be builders, designers and doers The progressive answer to these challenges is to create the infinite economy.

This is a fundamentally different world, one that rests on fundamentally different values. The extractive society is religiously fundamentalist, because that is the kind of tenacious faith that allows people to keep drilling holes in the ground until one comes up big - and then kill anyone who gets in the way. Americans are being taught that the only problem with Treasure of the Sierra Madre was that he hadn't found Jesus in time to tell him that it is OK to do what you have to do.

Originally posted to Stirling Newberry on Thu Sep 15, 2005 at 05:48 AM PDT.

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