RE: RE: Kuznets cycles and energy-system renewal
Mathew Forstater wrote: I have a very short encyclopedia entry on the Kuznets U hypothesis, but it is part of slightly a longer essay, if anyone is interested. I'd very much like to see it. I argue that Kuznets himself warned against applying what were some hunches about the early development of presently industrialized countries to currently 'developing' economies. Neverthless, in the 70s people like Paukert and Ahluwalia did just that, and even used cross-sectional data to test what was a theory about secular development. So they pieced together countries at different levels of GNP across a U shaped curve, implying that they were going to move along it. The problem here is that the conclusion that may be drawn is that countries with lousy income distribution should not worry, just keep on pursuing growth and they will become more equal. More recent evidence tells us this is not a very likely prospect, plus there is the problem with the environmental impact, since they are just talking about good old GNP/GDP grwoth, with all the problems with that. Cutler Cleveland has been doing interesting work for a long time on biophysical limits. At one time he supported the energy theory of value, which has some problems I think, although people like Herman Daly rejected it on the grounds that it was too similar to a labor theory of value, but I don't buy their non-critique of that. You mean Odum's eMergy stuff? It doesn't really work, but it's useful in lots of ways anyway, don't you think? Be that as it may, the Daly-Costanza ecological economics stuff has its good points, but it also has some weaknesses that can be improved by blending it with political economy, social ecology, feminist economics, etc. Absolutely true. I have some papers where I derive what I call some biophysical conditions for a sustainable economy--similar to some of what you can find in the ecological economics and sustainability lit under the names of things like 'rules for sustainability' etc. Is it on the Net, or can you send stuff to me offlist, Mat? I'd really be obliged. If we take this stuff seriously, it would entail a very major transformation of the way we live, the technological structure of production (transformation from an exhaustible resource-based to a renewable resource-based technological structure of production, etc.), whole sectors, industries, firms, occupations, skills, etc, would become obsolete, news ones required. There would have to a major sort of transition period, rethinking the whole layout in terms of the way we live and so on. There would definitely have to be either a guaranteed income and or guaranteed jobs for all (and there will be plenty to do) to make sure that the disruptions would not result in more massive unemployment, poverty, etc. I don't think it is impossible, but it would require a fantastic change in consciousness etc. Adolph Lowe, who taught at the New School for many years and who was thinking about these issues from the sixties on, thought that it was possible that it would take a mini-catastrophe or even a few mini-catastrophes to get the message through to people on a mass scale that we absolutely must change in fundamental ways. He hoped that it would take a major catastrophe, and he hoped that maybe it wouldn't take any catastrophes at all, but the way things have developed, with the inequalities and the technological developments, some people are able to insulate themselves from the effects of environmental and other problems, so we might be looking more to something like the old movie Metropolis than bioregionalist communism or communist bioregionalism. I can't see how will get there absent significant economic and social planning, with all the challenges that brings. We are not on the path to evolve in that direction presently, it doesn't seem, not automatically. Mat This is all very helpful and thank you so much. Mark Jones
RE: Kuznets cycles and energy-system renewal
I have a very short encyclopedia entry on the Kuznets U hypothesis, but it is part of slightly a longer essay, if anyone is interested. I argue that Kuznets himself warned against applying what were some hunches about the early development of presently industrialized countries to currently 'developing' economies. Neverthless, in the 70s people like Paukert and Ahluwalia did just that, and even used cross-sectional data to test what was a theory about secular development. So they pieced together countries at different levels of GNP across a U shaped curve, implying that they were going to move along it. The problem here is that the conclusion that may be drawn is that countries with lousy income distribution should not worry, just keep on pursuing growth and they will become more equal. More recent evidence tells us this is not a very likely prospect, plus there is the problem with the environmental impact, since they are just talking about good old GNP/GDP grwoth, with all the problems with that. Cutler Cleveland has been doing interesting work for a long time on biophysical limits. At one time he supported the energy theory of value, which has some problems I think, although people like Herman Daly rejected it on the grounds that it was too similar to a labor theory of value, but I don't buy their non-critique of that. Be that as it may, the Daly-Costanza ecological economics stuff has its good points, but it also has some weaknesses that can be improved by blending it with political economy, social ecology, feminist economics, etc. I have some papers where I derive what I call some biophysical conditions for a sustainable economy--similar to some of what you can find in the ecological economics and sustainability lit under the names of things like 'rules for sustainability' etc. If we take this stuff seriously, it would entail a very major transformation of the way we live, the technological structure of production (transformation from an exhaustible resource-based to a renewable resource-based technological structure of production, etc.), whole sectors, industries, firms, occupations, skills, etc, would become obsolete, news ones required. There would have to a major sort of transition period, rethinking the whole layout in terms of the way we live and so on. There would definitely have to be either a guaranteed income and or guaranteed jobs for all (and there will be plenty to do) to make sure that the disruptions would not result in more massive unemployment, poverty, etc. I don't think it is impossible, but it would require a fantastic change in consciousness etc. Adolph Lowe, who taught at the New School for many years and who was thinking about these issues from the sixties on, thought that it was possible that it would take a mini-catastrophe or even a few mini-catastrophes to get the message through to people on a mass scale that we absolutely must change in fundamental ways. He hoped that it would take a major catastrophe, and he hoped that maybe it wouldn't take any catastrophes at all, but the way things have developed, with the inequalities and the technological developments, some people are able to insulate themselves from the effects of environmental and other problems, so we might be looking more to something like the old movie Metropolis than bioregionalist communism or communist bioregionalism. I can't see how will get there absent significant economic and social planning, with all the challenges that brings. We are not on the path to evolve in that direction presently, it doesn't seem, not automatically. Mat
Re: RE: Kuznets cycles and energy-system renewal
At 07:10 PM 06/25/2001 -0500, you wrote: . I argue that Kuznets himself warned against applying what were some hunches about the early development of presently industrialized countries to currently 'developing' economies. without those warnings, the Kuznets hypothesis (that rising inequality is eventually solved by economic growth) is nothing but the trickle-down theory. I've wondered about the view that workers have to make a sacrifice to promote or save capitalism, whether it's trying to take off and become developed or it's in crisis. But in the orthodox theory, isn't interest the reward for saving, i.e., for abstinence? so shouldn't the working class be paid interest for making sacrifices? even better, shouldn't it be given equity? Some might argue that these sacrifices sometimes only involve relative deprivation, not absolute deprivation. But both the take-off and economic crises create new needs, which undermine the utility-value of real wages. So what looks like merely relative sacrifice could be absolute. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~JDevine
Kuznets cycles and energy-system renewal
Energy-supply systems tend to be highly centralised, large-scale and capital intensive. Therefore they tend to be the subject of waves of investment, consolidation, and eventual transformation as new technologies accumulate. Since the periods of renewal and transformation require massive new investment and therefore a transfer of resources from current consumption, they are often stressful in social-stability terms and may partly coincide with generalised recessions. However, in the past, capitalism has successfully negotiated such transitions and renewals. In 1955, Simon Kuznets (creator of national accounts and the concept of Gross National Product) published his inverted U theory of capitalist evolution: that income inequality rises in the early stages of development, and falls as economies mature. (see LBO #80 (November 1997)which may still be on Doug Henwood's website). One conventional approach, based on Kuznets-type cycles, to understanding current energy-supply concerns is to take account of investment cycles and try to see how these interact with wider conjunctural phenomena, such as the general business cycle, geopolitical considerations and so on. In this view, there is no absolute lack of energy, but shortages may arise in market-driven supply because of lack of infrastructure renewal, the result of a period of low prices. There will be no apocalyptic melt-down, just short-term supply difficulties and price spikes until raised profits lead to new investment and more abundant supply. This argument is well put in the following article, from the Kansas City Business Journal, 22 June 2001. This argument is important because it tells us something about what is likely to happen in the next few years, so we can learn from it. But it is an argument from past experience, and that is not an accurate guide, especially when entirely unprecedented things may be happening to capitalism's all-important energy-base. This argument that energy will always be available but is subject to cyclical change in availability, leaves aside the question of whether or not there is any ultimate resource constraint. The thinking is that enough investment will always find new exploitable reserves and that given time the energy markets, like all other commodity markets, will be self-correcting. This is certainly wrong. There is too much hard evidence now of the existence of severe constraints on future supply caused by reserve-depletion and the failure to add new reserves/resources to the world's energy portfolio. It is clear that conventional hydrocarbon reserves are strictly finite. Unconventional reserves do also exist (Alberta tar sands, stranded gas, deepwater gas etc) but they do not come cheap and may be irrecoverable for enviornmental and other reasons. So the underlying assumption in the Kuznets-type argument is too optimistic; nevertheless, Carlson in the article below is right about one thing. It is clear that we are entering a new period of sustained and much higher energy prices coupled with very high levels of investment in new sources of supply, particularly in oil and gas, and in the construction of new electricity generation capacity. This new investment-wave, coupled with the effects of economic recession and new forms of energy conservation (very easy in energy-guzzling nations like the USA), which together help reduce demand for energy, ought in normal circumstances to push the underlying problem away to another day. But these, as I hope to show, are not normal circumstances. Assuming conventional reserves, primarily of hydrocarbons, are strictly finite, the next question (moving beyond Kuznets-type cycles of infrastructure renewal), is whether the world economy can make the transition to an entirely new energy-base in the future. Presumably this would be some kind of hydrogen-based economy with much more conservation, use of renewables (especially wind power), new kinds of nuclear such as pebble-bed reactors, and more exotic things like fusion reactors, fast breeders, and so on. This is serious stuff. If conventional reserves are as finite as some think (me included), then if we don't transition to some entirely new energy-base, we shall have to transtion back to chopping wood and using steam engines to get coal. So some kind of transition is inevitable. The question becomes, how messy will it be? How much of humankind will be left even further behind, and will the resulting global inequality, which would be far more severe even than today, be manageable at all? The transition from coal and steam to oil and electricity took all of the first half of the last century, and produced two world wars and a legacy of absolute immiseration for two-thirds of humankind. Yet it should have been easy: oil was plentiful, easily obtainable and far superior to coal. Also, the global environment was far less stressed than it now is, and we were still in Herman Daly's 'half-full world'. None of these advantage now
