Wednesday, May 31, 2006

Unified Theory of Ecology and Economics

I'm sure there is nothing original or profound about my observations here, but it has occurred to me that it is possible to summarize both the tendencies of an evolving ecosystem and an evolving marketplace by a single unifying principle: The world adapts so as to maximize the rate at which resources are consumed. I'll call this the Principle of Maximized Consumption.[Click permalink to read more...]

This isn't a law, so much as it is a general tendency. To illustrate: solar energy is a resource, and plants evolved to take advantage of it. Plant biomass is a resource, and herbivores evolved to take advantage of it. The meat of herbivores is a resource, and carnivores evolved to take advantage of it. If there is an untapped resource, then some critter will tend to evolve to take advantage of it.

Of course, what prevents this from being a law is that evolution is too slow to take advantage of all possible resources, and there are limitations to what biological systems can digest. So even though coal and petroleum and uranium ore are potential energy sources, it's unlikely that any ordinary creature would evolve that can make use of them. That brings us to humans.

Humans are pretty much unique in being able to make use of resources other than through bodily processes. We can build gasoline engines or coal-burning plants or nuclear power plants that allow us to use resources that we could never eat or digest. Once we start talking about humans, we enter into a different field, economics rather than evolution. But I think that the same general principle applies: Humans, working as free economic agents, work so as to maximize the rate at which resources are consumed.

That's the reason that free enterprise and capitalism leads to increased prosperity: because as time goes on, a greater and greater fraction of the Earth's resources are diverted to the satisfaction of human wants and needs.

That works fine up until we start running out of resources. The magic of markets doesn't lead to conservation---it leads to the opposite, towards more consumption. When there is an alternative to existing resources, then this magic may work to prevent shortages. For example, once upon a time, wood was the major fuel source. Growing populations would have deforested the Earth except for the fact that consumption could increase even faster by switching to petroleum.

As we begin running out of petroleum, will the magic of the markets save us? Well, if some new resource, such as nuclear power or solar power promises to provide more energy than we are currently getting from petroleum, then we will make the switch. But if conservation is also necessary, that is not going to come from the free market. Voluntary conservation is, I believe, a joke. The problem is that, according to the Principle of Maximized Consumption, if a significant number of people voluntarily consume less of some resource, the market will step in and find other ways to consume the savings. Total consumption is not going down without national and international governments getting involved.
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