[Fis] Fwd: Introduction Economical Ecologics & Information

Dear all,

I believe that Pedro & Luis text is a good start for discussion.

Ecological / environmental / thermodynamic issues are not totally untouched by economic theory. One of the first to debate links between thermodynamic laws and laws of economic was Nicolas Georgescu-Roegen, e.g.:
http://www.interactives.org/helio/georgescu-myths.html
Also, models of Jay Forrester introduced the famous "limits to growth" and "sustainable growth" concepts.

However, overall it should be admitted that economic treatment to balance between nature and society is mostly confined to "market will resolve it" approach.

1. Thermodynamic limits

It is not clear whether the carrying capacity of Earth is overrun, or to be overrun in the nearest future. Some recall that in 1960s projections were that oil should end by year 2000. Although noone debates that mineral sources of energy are not renewable, there is an argument that "technology will always help". Some economists claim that humanity will always be able to find new deposits, or will introduce new sources of energy.
It is evident that carrying capacity can only be realized when "mode of use" of resources is considered, which includes both rate of usage for resources-already-in-use (e.g. consumption of oil per year), and introduction of new resources into society. A little more than 150 years ago, oil was considered just a "black smelly liquid" which "spoils good soils".

However, since all mineral resources take millions of years to restore, any reasonable rate of utilization for any of these presents a threat of total elimination of the resource. Thus, the only sustainable strategy of a society is to cope with systems that reproduce at a rate comparable with rate of social reproduction: that is, living matter. A long-term thermodynamic strategy could be to build some energy-trophic pyramid, human on top and chemotrophic bacteria, or nano-robots in their place in the future, at the bottom, consuming very basic materials and solar energy to turn both into "things useful for human".

2. Can market resolve the problem?

The economists' argument is that in the market economy, price of scarce resource goes up as resource becomes more deficit. However, price fluctuations in any mineral market, incl. oil market, have nothing to do with projected scarcity. It also has nothing to do with value of natural resource by itself.

The main problem is that thermodynamic value of resource does not correspond to its social value.
One simple example is the following. As raw material enters "process of manufacturing" (e.g. first chopper chops the wood, then carpenter prepares it, then carver makes carvings etc.), it is evident that more and more material and energy is "wasted"; the rate of "useful energy" in the manufactured item decrease, while its value increases.
Another example is value of raw material itself. Nature is "free" to a society, it becomes "valuable" when used: e.g. 150 yrs ago, an oil field had negative value, because it was not suitable for agriculture.

Please note that technology may create economic value, but it cannot create matter nor energy; it is only a way in which one type of matter and energy is transformed to other type of matter / energy. Also, Goergescu-Roegen mentions it in his paper.

It should be admited that, despite what economists themselves say (e.g. Gary Becker and so-called "economic imperialists"), prices in the market do not represent all information. Even with cultural values, culture being a part of social system, items of the highest cultural value are not neccessarily the most expensive (see David Trosby's book, I can give references to those interested). Resources outside of social system cannot be valued properly by the market.

My suggestion is: markets do not resolve problems, because economic value does not represent every aspect of "importance" of given resource for given society. Left for market to resolve, problems of resource scarcity will become more and more serious. We know that during the last century, many species became extinct both in ground and water, when they were subject to "market regulation".

And this brings us to Q9 in the list: what shift of paradigm should occur?

3. What information has to do with it all?

First, "mode of use" is regulated by traditions, habits, norms, technologies etc. accepted in the society. Since all these constitute a memory of a society, or a "social memory", it is a content of social memory that regulates interactions between society and nature.
For more explicit presentation of these concepts, you can see my paper in Journal of Sociocybernetics*:
http://www.unizar.es/sociocybernetics/Journal/JoS2-2.pdf
or, a presentation in my web site
http://www.geocities.com/pluksha/papers/INTAS_social.ppt
The paper also gives answer to Q7, as it provides a possible general model of economic growth in which scarcity can be considered. There, I also argue why environment should be included into all macro-models of social dynamics.

As I argue in my paper presented in Summer FIS session, memory is an important aspect of information processes:
http://www.geocities.com/pluksha/papers/New_appr_info.pdf

I also argue in the paper, that information may have two criteria for value: survival, or evolutionary, criterion (information that helps system to last longer is more valuable one), and thermodynamic criterion (information that helps system to achieve same result with fewer resources wasted is more valuable one).

Changes in social memory, or shifts in traditions, technologies etc., are the key to change of "limits to growth", and a way to come up with "balance with nature".
"Traditional" capitalistic market economy is unable to capture future environmental crisis, and so far the response was that government should eliminate "market inefficiencies". Other inefficiencies include e.g. growing inequality between and within societies, cyclic economic crises etc. The problem of "bringing new paradigm" is as if to introduce a new "mental DNA" that will eliminate less efficient old traditions and approaches; and to search for such "mental DNA", or a new paradigm, is in my opinion a task that goes beyond the scope of present discussion (maybe such discussion should be initiated in the list in the future).

The problem introduced in this discussion should be considered as a sub-problem of social self-reproduction, from the side of "resource provision". Other aspects of social self-reproduction include "instructions" (what guides social self-reproduction) and "implementers" (those who achieve social reproduction using resources - that is, socio-economic agents). Considering only raw materials and not parts of society, we may exclude important components of an integral system.

Pavel Luksha

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* Since 2001 when I published the paper, I have elaborated the concept which is presented so far only in Russian. Few of the FISers who can read Russian text can take a look at
http://www.geocities.com/pluksha/papers/social_SR_r2.doc
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