Consciousness of Sheep
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One of the ways we know that (media theatrics to the contrary) there is little (policy) difference between Donald Trump and Keir Starmer is that central to both is the restoration of economic growth. Both, that is, are adherents of the same neoliberal economics which has plagued us for the best part of 50 years. The one difference within this framework being that Trump at least seems to have a vague idea of what causes growth to occur, while Starmer is clearly clueless… allowing the fracking of previously off-limits shale deposits beneath federal land might (assuming the EROI is sufficient) generate a brief upswing in America’s real economy. Whether this can be sustained is doubtful, given the rapid depletion rate of fracked shale deposits. But at least “drill baby drill” demonstrates some understanding that energy is, and always was, the driver of economic growth.
Per capita GDP growth though, was so low in pre-industrial economies that any attempt to chart them alongside industrial GDP growth produces a preindustrial flatline. Economic growth fluctuated, of course, but the year-on-year changes were miniscule compared to the changes seen since the introduction of the steam engine in the eighteenth century. Indeed, broadly, economic growth in preindustrial economies followed the (temperature) highs and lows in the climate record. A period of warming between 8,000 and 6,000 years ago created the conditions for the transition from hunting and gathering to the rise of the first agricultural civilisations. Similarly, a period of warming around 5,000 years ago created the conditions for the bronze age trade system in the Eastern Mediterranean… the fall of which corresponds to the onset of cooling around 4,000 years ago.
We see the same correspondence of warming climate and economic growth around 2,000 years ago – the Roman warm period – and again 1,000 years ago – the medieval warm period (when Greenland was actually green). In Europe, one artifact of these warm periods is the widespread development of stone buildings. Whereas, in the cool periods which follow them, we witness a reversion to timber construction. And this provides a clue to the relationship between (preindustrial) growth and climate. Stone building required a huge pool of surplus labour, free from the need to grow food. This is enabled during warm spells where growing seasons are longer, growing conditions more favourable, and atmospheric carbon dioxide (plant food) is higher. Those civilisations which are able to take advantage of these conditions can produce enough surplus food to engage in activities like metal working, stone construction, and, of course, warfare. But even the greatest preindustrial civilisations were vulnerable to climate fluctuations. And once the weather turned colder, harvests failed, famines grew, and the ability to maintain the previous levels of growth disappeared… in a word, collapse.
There was though, an exception and, I would argue, the reason why industrialisation happened when and where it did. Following the end of the medieval warm period, the climate didn’t just shift to a cooler state, but rather entered the “little ice age,” which brought much colder weather, and which lasted far longer. This shifting climate was a key reason for the spread of the Black Death across Europe in the 1350s, as poorer diet led to lower herd immunity. But it also created the conditions for the religious wars of the seventeenth century and the revolutions of the eighteenth. But despite the seemingly devastating underlying conditions – which doubtless fuelled the European timber (energy and construction) shortages of the period – Western Europe didn’t collapse into another dark age. Indeed, in the depths of the little ice age, Europe experienced a renaissance and scientific enlightenment greater even than those previously only seen in warm periods.
How to explain this contradiction? In short, “the Atlantic trade” – arising from a complex web of necessity and accident, which enabled western Europeans to access warmer climates where foods could still be produced in abundance. And one substance more than any other amounted to the first – and usually overlooked – energy revolution of the modern world.
Unless you have experienced gnawing hunger, it is hard to understand the condition of most Europeans living through the little ice age. Nor is it easy to understand the permanent alcoholic haze accompanying a diet of small beer or light wine as the only safe forms of liquid (although you might consider how productive and thoughtful you are when you wake up with a hangover). Imagine though, the development of a bitter, aphrodisiac drink (coffee) using boiled (and thus safe) water, and sweetened with highly calorific (energy) sugar… it should be of no surprise at all that the enlightenment originated in the coffee houses of London and Paris.
Other, less dramatic consequences of the Atlantic trade include the importation of root vegetables for animal feed. Prior to this, it had been common to slaughter all but breeding stock in the autumn, as there would not be sufficient animal feed over the winter. But new root crops – which could be stored for longer – allowed far more animals to live (and work) through the winter months. In this sense, we might say that the first energy revolution of the modern world was a revolution in muscle power, as both humans and work animals received sufficient surplus calories to grow their output and (like the Romans and the Normans) to engage in non-agricultural work… including at the top, greater engagement in the intellectual pursuits that led to modern science and technology.
A second energy revolution also resulted (indirectly) from the Atlantic trade. Although we tend to think of the Industrial Revolution beginning with coal power in the nineteenth century, labour-powered mechanised (wool) weaving had been common for centuries. A key commodity of the Atlantic trade – cotton – was though, a superior cloth, viewed in Europe as almost as prized as silk. Demand for cotton cloth quickly outpaced supply, creating shortages which would eventually be filled by the water powered manufactories of Scotland and Northern England (the accident of geology creating steep and narrow valleys containing fast flowing streams and rivulets).
As with weaving technology, water wheels had been around for centuries. But to harness the force of water needed by a cotton mill required a material far stronger than timber. And so, mill owners turned to a still preindustrial iron industry to provide reinforcement for timber water wheels… thereby generating a new charcoal (and timber) shortage. At the time, charcoal was considered superior to coal (which burned too hot) but needs be as needs must, and in many of the same valleys which provided water power, coal seams jutted out of the hillsides. And so, coal-powered iron working developed.
Herein though, we find a curse which dogs the heels of industrial economies… depletion. There is only so much coal which can be dug out of the side of hills. Eventually this is mined out and miners are forced to go deeper. Put another way, we soon run out of the cheap and easy fuel source and must move on to the difficult and expensive. Open pits, using animals to lift the mined coal, were a relatively cheap alternative. But pits can only go so deep before the limits of animal power prevent further extraction. Moreover, and in common with deeper mining, at a certain depth, water becomes a problem.
The solution, from the early eighteenth century, was to use some of the mined coal to provide the heat for a steam powered (beam engine) pump. And in 1776 – the year Adam Smith was making up modern economics and the Americans were taking the first steps on the journey to global hegemon, just down the road from Smith, James Watt was putting the final touches to the condensing steam engine which marks the beginning of the third energy revolution – the age of (coal) steam. From its humble beginnings pumping water out of mines, the steam engine would drive the machinery of industry which underlay the unlikely rise of Britain as the first global empire. British foundries provided the steel for construction as far afield as the Canadian railways and the Sidney Harbour Bridge. British railway yards built the locomotives, and British shipyards built the ships that transported them. Famously, British shipyards built the Japanese navy which, in 1905, sank the Russian fleet in the Straits of Tsushima.
Even at the high point of British industrial growth in the 1860s, however, economist William Stanley Jevons was warning that the ever-increasing consumption of Britain’s coal reserves risked future decline – first relative, as competing economies overtook Britain, and ultimately absolute decline as the remaining coal reserves depleted. Nor, crucially, would “energy efficiency” measures save the day because such measures cheapen the price of coal and so paradoxically result in higher consumption.
Jevons was right (although perhaps not about the timescale). By the 1880s, British industrial output had been overtaken by both Germany and the USA. And British coal output eventually peaked in 1913 (although the needs of two world wars resulted in government subsidies to keep coal production high for the next seven decades). World coal-based coal (i.e., that produced with coal technology alone) eventually peaked in 1927, bursting the bubble of the “roaring twenties,” paving the way for the 1929 Wall Street Crash and the ensuing Great Depression. Had coal been the only fossil fuel, that depression would have continued deepening year-in, year-out until the economy had reverted in size to that which could be sustained using renewable energy alone. But even before the economic reversal, America had embarked upon the fourth energy revolution… the age of oil.
Born almost accidentally out of the industrial slaughter of America’s whales, the black liquid which seeped from the ground and poisoned cattle turned out to be an ideal substitute for whale oil in the oil lamps of the period. And it turned out that in places like Oklahoma and Pennsylvania one need only hammer a pipe some 70 feet into the ground to have the black liquid gush out under pressure. A kerosene lighting industry grew rapidly alongside the new oil wells. But it was two waste products of the lighting industry – petrol (gasoline) and diesel – which were to underpin the technologies of the oil age.
Theoretical designs for internal combustion engines predated oil production by several decades. Other substances, including hydrogen and gunpowder had been tried with catastrophic results. But petrol and diesel had Goldilocks properties which made them just explosive enough while being relatively safe to store (and, because they were waste products, cheap) to allow internal combustion engines to operate effectively in the real world. That they should be incorporated into horseless carriages in a place called Detroit is not so surprising either. America’s main, preindustrial trade route ran from the Atlantic, down the St Lawrence waterway through the Great Lakes in the north, across to the Mississippi catchment and down the Mississippi River to the Gulf of Mexico in the south. But to move goods from ships in the Great Lakes across the land bridge to the Mississippi catchment required horse drawn carriages built in towns like Detroit located between Lakes Erie and Huron. As engines replaced horses, so the carriage makers of Detroit merely rearranged their production processes to accommodate them.
While internal combustion vehicle use took off in interwar America, Europe lagged behind. Which was why Hitler’s Volkswagen (people’s car) was considered revolutionary in its day (the British equivalents – the mini, the Hilman Imp and the Morris Minor would not appear until the 1960s). The irony being that while Germany was building the second (the Model T Ford being the first) affordable car, and the first motorway network (which inspired Eisenhower to implement the USA’s Interstate Highways) it was a country devoid of oil reserves. So that, even before the war, supplies from Romania and Hungary could not keep pace with German demand.
Not that Britain, which depended upon oil imports from Persia, was much better off. This is why there were “two wars” – the near stalemate between September 1939 and November 1942, and the march to victory between November 1942 and May 1945. In the former, neither Britain nor Germany had the energy to win a decisive victory. Drawing on Soviet supplies and stockpiling oil during the winter of 1939/40, Germany was able to (at the cost of its navy) scrape a victory in Norway while driving the British out of France and forcing a French surrender. But this done, there was no serious prospect of invading the British Isles, even if they had succeeded in defeating the RAF in the summer of 1940. For the British government, only somehow drawing the USA into the war offered a hope of an eventual victory. At the same time, the German government understood that only by seizing the Soviet oil fields in the Caucasus (while simultaneously cutting the Volga oil transport route) could provide them with the energy needed to win. Only in the Mediterranean (because in the nineteenth century, the British happened to have occupied Egypt, and the Italians happened to have occupied neighbouring Libya) were the British and the Axis in contact. And the battles which developed highlighted the lack of energy on both sides. The surprise victory over the Italians in 1941 allowed the British to drive west toward Benghazi and El Agheila… where they reached the limit of supply. The arrival of Rommel’s Afrika Korp at a starting line closer to their supply lines contributed to their push toward the Egyptian border and the siege of the port of Tobruk, by which time they had outrun their supplies. Later, a resupplied British army was able to relieve Tobruk and push the Afrika Korp back to its start lines, again exhausting British supplies in the process. In the Spring of 1942, a resupplied Afrika Korp repeated the earlier battle, driving the British back to Egypt but this time taking Tobruk and driving the British all the way back to El Alamein, where the geography and exhausted supplies as much as a British defence halted them. Only with American resupply and a reordering of the British command did it prove possible to break the Afrika Korp in November 1942, and with the Anglo-American landings in French North Africa, drive the Axis out of Africa.
November 1942 marked a turning point elsewhere too. The German attempt to cut the Soviet oil route along the Volga at Stalingrad failed in the face of a major pre-prepared Soviet attack which not only surrounded the sixth army in Stalingrad, but by driving on Rostov-on-Don, threatened to cut off the entire German army group in the Caucasus… forcing a withdrawal and ending any German hope of seizing the oil required to win the war. By 1944, Germany had some of the most advanced tanks and aircraft of the combatants but lacked the oil to power them. Meanwhile, the USA was producing six out of every seven barrels of oil consumed in the conflict, so that, for example, the loss of Sherman M4 tanks to German Panthers in northern Europe was of little consequence because they were being built faster than they could be destroyed. Indeed, oil power had, as Isoroku Yamamoto is reputed to have feared, awakened an American industrial giant which had drawn upon the resources of an entire continent not only to supply its own military, but those of its allies too, allowing it to fight and win wars across the planet.
It was though, the process of converting proverbial swords into ploughshares in the aftermath of the war which ushered in the modern world. It is not simply that (via Marshall Aid) the USA funded the rebuilding of the economies of both its allies and former adversaries, but that the rebuilding involved the conversion of formerly coal-based economies to modern oil-powered economies. The additional energy derived from oil ushering in a period of previously unimaginable economic growth:
“The accumulated world industrial output between 1953 and 1973 was comparable in volume to that of the entire century and a half which separated 1953 from 1800. The recovery of war-damaged economies, the development of new technologies, the continued shift from agriculture to industry, the harnessing of national resources within ‘planned economies,’ and the spread of industrialization to the Third World all helped to effect this dramatic change. In an even more emphatic way, and for much the same reasons, the volume of world trade also grew spectacularly after 1945…”
Nor was it just about quantity, the technology harnessing the energy was qualitatively different too. As Tom Murphy explains:
“Let’s set the stage with a thought experiment about three equally-separated times, centered around 1950. Obviously we will consider the modern epoch—2015. The symmetric start would then be 1885, resulting in 65-year interval comparisons: roughly a human lifetime.
“So imagine magically transporting a person through time from 1885 into 1950—as if by a long sleep—and also popping a 1950 inhabitant into today’s world. What an excellent adventure! Which one has a more difficult time making sense of the updated world around them? Which one sees more ‘magic,’ and which one has more familiar points of reference? The answer is obvious, and is essentially my entire point.
“Take a moment to let that soak in, and listen for any cognitive dissonance popping inside your brain.
“Our 19th Century rube would fail to recognize cars/trucks, airplanes, helicopters, and rockets; radio, and television (the telephone was 1875, so just missed this one); toasters, blenders, and electric ranges. Also unknown to the world of 1885 are inventions like radar, nuclear fission, and atomic bombs. The list could go on. Daily life would have undergone so many changes that the old timer would be pretty bewildered, I imagine. It would appear as if the world had blossomed with magic: voices from afar; miniature people dancing in a little picture box; zooming along wide, hard, flat roads at unimaginable speeds—much faster than when uncle Billy’s horse got into the cayenne pepper. The list of ‘magic’ devices would seem to be innumerable…”
Worryingly, Murphy goes on to explain why the changes since 1950 have been a lot less revolutionary:
“Now consider what’s unfamiliar to the 1950 sleeper. Look around your environment and imagine your life as seen through the eyes of a mid-century dweller. What’s new? Most things our eyes land on will be pretty well understood. The big differences are cell phones (which they will understand to be a sort of telephone, albeit with no cord and capable of sending telegram-like communications, but still figuring that it works via radio waves rather than magic), computers (which they will see as interactive televisions), and GPS navigation (okay: that one’s thought to be magic even by today’s folk). They will no doubt be impressed with miniaturization as an evolutionary spectacle, but will tend to have a context for the functional capabilities of our gizmos.
“Telling ourselves that the pace of technological transformation is ever-increasing is just a fun story we like to believe is true. For many of us, I suspect, our whole world order is built on this premise.”
This latter observation brings us to the defining economic problem of the last half-century… the so-called “productivity puzzle.” In the years following the Second World War, productivity – output per worker – rose dramatically. This appeared to be to do with technology… and obvious conclusion to draw from processes morphing from coal to oil age technologies. Consider, for example, the disappearance of typing pools following the development of the first desktop PCs. And so, the proposed “solution” to faltering productivity growth ever since has been to somehow upgrade technology. There is though, a far more complex process at work.
In physics, “work” is referred to as “exergy,” which translates as “value” in economics (although most economists are entirely blind to this). That is, while in common parlance we talk about “consuming” energy, in reality we can only convert energy from one form to another and, because of the laws of thermodynamics, always generating waste heat in the process. Unleashing the energy locked up in chemicals like petrol or gunpowder can result in a large amount of kinetic energy – a car driving at 70mph or a bullet travelling at the speed of sound – but only at the cost of massive waste heat. Technology – which can be as simple as a flint axe or as complex as a nuclear reactor – is the means by which we harness the exergy derived from converting energy from one state to another (e.g., from chemical to kinetic). This conversion of energy creates economic value because the exergy (work) allows us to convert raw resources into useful products. Seen in this light, what productivity is really about is maximising exergy and minimising waste heat.
This was extremely limited in our long preindustrial existence because our renewable energy sources – human and animal labour, wood and charcoal burning, and limited wind and water power – were relatively weak to begin with. So that, despite technologies to optimise exergy (e.g., a longbow in warfare or a treadwheel crane in construction) the length of the growing season remained an absolute limit to growth. Industrial economies are different primarily because they tap into the stored solar energy locked up in fossil fuels along with the ancient stardust that is uranium in a nuclear reactor. These energy sources are so great and concentrated that industrial economies gradually entered a phased lockstep in agricultural production and trade which all but obviates the previous power of the growing season. Moreover, as fossil fuel use has increased, so the proportion of people growing food has fallen dramatically, even as the number of discrete non-agricultural occupations has exploded.
Such is the additional power of each new energy source. Technology though, follows an “S” curve. While each is still a coal-based technology, the gulf between a Newcomen beam engine and Watt’s condensing engine half a century later is enormous. So too is the gulf between Trevithick’s 1804 steam locomotive trundling down the Taff valley just a little faster than a team of horses (and having to be towed back up) and Mallard reaching the steam locomotive record of 126mph 132 years later (by which time electric and diesel electric locomotives were more efficient). Put simply, new technologies (developed to harness the exergy from new energy sources) go through a series of cheap and easy improvements. Beyond this, improvements are harder to engineer and come at an ever-rising cost. And, as was true of Mallard, eventually the technological improvement is more expensive (in energy) than the benefits it delivers.
The final element of the so-called “productivity puzzle” concerns the energy source itself. Remember how early British coal mining began with people picking coal off the side of hills before digging pits and, eventually, using steam powered pumps to dig ever-deeper mines? This is what is referred to as the “low hanging fruit” principle… that we always begin by exploiting cheap and easy deposits before moving on to harder and more expensive deposits. Another way of stating this is that there is a tendency for the energy cost of energy to rise. To some extent – particularly in the early days – this can be offset by technological improvements and economies of scale. However, there always comes a point at which the rising energy cost of energy outpaces technological improvements. Note that – although contemporaneous – this is not to do with volumes. Peak oil – the point at which we reach maximum oil extraction – has been anticipated for much of the last half century, only to be thwarted by new reserves and new technologies. Less obviously though, each of the new reserves and new technologies developed since the oil shocks of the 1970s has come at an increasing energy cost (the energy needed simply to produce energy). Largely hidden from view, this has meant that the surplus energy available to the wider, non-energy economy has been shrinking despite the absolute volume continuing to rise. To give an analogy, there might still be plenty of petrol at the filling station, but it costs 24 times as much as it did in 1973, so that the amount of driving it allows has been dramatically curtailed.
One (of many) reason why we should fire the economists and replace them with physicists and engineers, is that they came up with a monetary (non) solution to the energy crises of the 1970s. Underlying this error is the key abstraction used in economics to attempt to make sense of the interactions between billions of humans which make up the real economy. Even the most powerful supercomputers today couldn’t begin to model this. But one thing that might be modelled is the monetary transactions between people. Of course, this applies more to people in the developed economies, where digital bank records give a more focussed picture than, say, paper ledgers trying to capture cash transactions (and missing most non-bank transactions). Nevertheless, an approximation of monetary transactions can be used to calculate such things as GDP growth (i.e., the growth in monetary transactions within a country) and balance of payment/current account volumes between countries. Economists have been using abstractions of this kind for so long that they have mostly forgotten that they are mere maps which hide the complexity of the territory they are attempting to describe. And so, viewing the world through the lens of currency, they prescribe currency-based “solutions” to any crises that arise.
The post-war “solution” was for governments to spend currency directly into the economy… a practice which had previously been regarded as inflationary. Without that new currency, the post-war boom would not have happened. But why did it work that one time? Simply because the western transition from coal to oil generated so much surplus energy that the real economy could absorb all the additional (currency) claims made on it. Which is also why the same approach in the 1970s came to grief. Because by then, surplus energy was declining and the spare capacity in the real economy had been used up.
After more than a decade of stagflation, the alternative (neoliberal) “solution” was to use the price of currency itself to regulate the economy. High interest rates appeared to bring inflation under control… although it was really the severe slump caused by the Iranian revolution which lowered inflation. And a series of con-tricks – deregulating banks, selling public assets, offshoring jobs, expanding private debt, etc. – appeared to usher in a new era of growth – although without the new oil from Alaska, the North Sea and the Gulf of Mexico, the con-trick wouldn’t have worked.
In 2005, world conventional oil production peaked, lighting the fuse beneath the debt mountain created by the neoliberal deregulation. In 2008, the bubble burst, ushering in the long depression that we are still living through. The financial “solution” has been quantitative easing (a kind of Marshall Aid, but only for the banks and the stock markets) together with low interest rates (to prevent the wider public defaulting on our debts). But growth in the real economy has been absent, despite the irrational hopes of the proponents of fracking and “green” energy (neither of which provide sufficient surplus energy to generate real growth). Indeed, with each new dollar of GDP growth coming at the cost of $10 of new debt, all we have been doing since 2008 is pumping up an even bigger bubble… something which cannot end well.
When was growth? In periods of our history when surplus energy freed people from the daily chore of merely feeding ourselves. When does growth stall? When the surplus energy goes away. In pre-industrial economies, this meant periods of poor harvests and longer winters. In industrial economies, it means when the non-energy economy outstrips the surplus energy required to build, operate, and maintain it. Can governments today engineer new economic growth? Not until they give up vain attempts to use excess claims (currency) on the real economy to generate surplus energy that doesn’t exist. But in theory, if some yet-to-be-invented technology could harness the power of the nuclei of atoms to generate exergy far greater than we derive from oil, then we might usher in another century or more of growth, during which people might develop technologies as mysterious to us as ours would be to a medieval peasant. But the odds are stacked against it, since it would require that we divert the last of the world’s surplus energy, along with our best disruptive thinkers to the task. And even then, the majority of the population would have to accept a poorer and less material way of life… something that it will have to accept anyway if surplus energy continues to deplete.
When was growth? In periods unlike our own… and a world without growth is no place you want to be.
As you made it to the end…
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