What is our economy?

17 February 2013

Norman Pagett writes:

the economy is not about wages or money
the economy is an energy equation, or more accurately a dynamic of surplus energy
In a primitive context, I must either grow or kill my energy source, and use that to rear my offspring and support their mother and myself.
My existence is in a state or equilibrium, and no ‘economy’ can exist because I need to consume most of the energy I produce.
But if I collaborate with 99 other people who can support 10 to do other ‘work’ then those individuals have to be paid. They are paid with the ‘excess energy’ of the 99 people who can ‘afford’ their support.. Wages are paid to a ‘specialist’ for his skill (blacksmith, soldier, priest or whatever)
Our ‘civilisation’ has merely scaled up this equation to support all the various trades we engage in, but those trades are still dependent of the surplus energy delivered by those who produce food. A trade-skill loses its value if the food-energy to support it isn’t there. (a brain surgeon stranded alone on a desert island has to go back to food foraging or die)
This is why our economy is entirely dependent on a constantly expanding surplus energy. In the modern context that means cheap oil. Unfortunately there is no cheap oil left, so we are trying to support all those ‘workers’ on expensive oil. but they are becoming unaffordable. That is why our economic system is collapsing
Paying higher (paper) wages simply allows the delusion to go on a little longer, but doesn’t change anything.
Money-value is entirely dependent on surplus energy, It is energy that is the backbone of the world economy, not wages.
without an energy surplus we do not have an economy