autocatalytic networks versus energy

[phantom power]

The very diversity of the economic web is autocatalytic.

If this view is correct, then the very diversity of economic goods and services is a major driver of economic growth. Indeed, I believe that the role of diversity of goods and services is the major unrecognized factor driving economic growth. Jane Jacobs has made the same point in her thoughtful books about economic growth and economic diversity in cities and their hinterlands. Economist Jose Scheinkman, now chairman of economics at the University of Chicago, and his colleagues studied a number of cities, normalized for total capitalization, and found that economic growth correlated with economic diversity in the city. In a similar spirit, microfinancing of a linked diversity of cottage businesses in the third world and the first world seems to be achieving local economic growth where more massive efforts at education and infrastructure, Aswan dams and power grids, seem to fail.

--Stuart Kauffman, Investigations

Several connections with our ongoing topics of environment and energy suggest themselves. Discuss.

[phantom power]

1. Like, for instance,

can we help preserve economic activity in the presence of a peak-oil powerdown, by fostering diversity of economic niches? What is the role of maximizing energy supply (or minimizing loss of energy supply) and what is the role of economic diversity?

[jpak]

2. Diversity = wind + solar + biomass + geothermal + tidal + wave power + efficiency

Nondiversity = nuclear power

:evilgrin:

[phantom power]

3. I agree, insofar as diverse energy industries is a subset of economic diversity.

I want to emphasize that diversity in an autocatalytic system (ecology, economy, etc) is not a substitute for energy. A major topic of the book is thermodynamics of autocatalytic systems, specifically the necessity to couple to energy sources. All things being equal, more energy can support more diversity.

However, (all things being equal) more diversity can continue to arise without additional energy, which I think is a possibly very valuable bit of insight, given that we have screwed the global energy pooch, and so we will be grappling with a global economic powerdown.

There are other, more gloomy implications of this book. One is that cascading failures adhere to a power-law. With lower frequency, mass-extinctions occur in ecologies and economies.

We will be privileged to witness a simultaneous mass-extinction in our economy, and in earth's ecology. A big part of that cascading failure in our economy is going to be the consequences of rapidly losing our economy's energy source. It has been coupled (thermodynamically speaking) to a particular energy source: fossil fuels. The more energy we can preserve, the better chance we have of minimizing the mass-economic-extinction.

So, I still view nuclear power as a tool-of-choice for mitigation. However, this concept of attempting to preserve autocatalytic diversity may represent an entire orthogonal toolset for mitigation.

[GliderGuider]

4. I'm sorry I missed this earlier.

It's an interesting idea that bears directly on notions of resilience and the shibboleths (love that word) of diversity and growth in modern civilization.

I'll start by saying that I don't think that product diversity is a primary driver of economic growth, but rather in a highly interconnected economy with trans-regional trade, growth and diversity feed each other. As the economy grows more people want to capture some of the money changing hands. In a market economy the best way to ensure this is to make a slightly different product from those already in the marketplace. This gives you a chance to grab mindshare through advertising and to leverage off similar products' successes while creating your own niche. Advertising for your new product variation then stimulates more demand causing more growth.

It's obvious that increased product diversity requires little energy on its own. As a result it might seem that diversity could be retained in a low-energy civilization. Keep in mind, though, that the main current incentive for diversity is a growing economy. If the economy stops growing, or even starts to shrink (whether as a result of outright energy declines or indirect results such as declining populations or transport network breakdowns) the incentive to compete with established, widely distributed products by creating variations on a theme will be greatly reduced.

The rise of product diversity in such a society is much more likely to be a result of localized economies. Local products will be developed more to satisfy unfulfilled local demand rather than to compete with imported products. Such diversity would add greatly to the resilience of the civilization but would be largely disconnected from overall economic growth. It is of course possible for a local or regional economy to grow, but product diversity is of less value in a small economy since the market can be easily saturated by fewer product variations.

My $0.02 CAD (which is today worth $0.019128 USD).

[phantom power]

5. It may represent a way to decouple "growth" from "health" and "resource use"

Our current economics has always been based on a correlation between economic "health" with "growth" and simultaneously with "increased resource use." This has of course led to the enormous goat-rodeo we now find ourselves in.

It seems at least plausible that it's possible to re-cast economic "health" in terms of "healthy autocatalytic diversity." In Kauffman's formulations, this is linked to being "back from the edge of chaos." On the other hand, it's also linked to being "not too far back."

I have a feeling that we might in retrospect see our modern economy as being too close to the transition. Too much, too fast, too out of control. Too fast an advance into the "adjacent possible." A post-collapse economy will be unhealthy due to being too far from chaos: insufficient diversity for true health.

It just begs for attempts to engineer the tuning, to try and avoid both overshoots, and cascading failures. On the other hand, the nature of his postulated "fourth law" might imply that this kind of tuning is not possible. You might be able to change the scaling of the power law, but not it's fundamental nature. Like changing the scale-factor of an exponential curve. Pull back far enough, and you see that its shape has not really changed.

[GliderGuider]

6. The only hope I see for such a paradigm shift

would be if most of our economic and social structures, as well as most of our people, were stripped away by going through a bottleneck, but that the seeds for a diverse, resilient, sustainable value set make it through. Not surprisingly, that's exactly what I think is going to happen.

Your point about the nature of exponential curves can't be banged home hard or often enough.