Chapter II, Section D.  All wealth is ultimately derived from the Sun

As discussed in Part I, nuclear chemist Frederic Soddy summarized that the wealth of nations is derived from energy. All wealth, then, is ultimately derived from the Sun. Even Soddy’s radiogenic isotopes that store nuclear energy were forged by the Sun’s furnace during the formation of the solar system. Most of the wealth we tap today is prehistoric solar energy stored in the form of fossil fuels. Soddy championed the technocratic idea to base currencies on energy units. Most economists scoff at the suggestion that the complex modern economy can be based on a commodity. But is energy only a commodity?

Energy is currently conceived only as a commodity: energy resources fetch a price in the market, and energy is bought and sold in kilowatt hours, gallons of gasoline, and cubic feet of natural gas. Thus wouldn’t an economic system based on energy, then, only further empower those already with the most economic power in the United States, the energy providers? Is the pursuit of this commodity already wreaking havoc on the environment like some 19th century gold rush? The answer in this paradigm is yes, very definitely. But the current paradigm is an energy economy that only embraces the 1st law of thermodynamics. In addition, it is coupled to the notion that value lies in unlimited, or at least fixed, resources converted into value. What is missing in the current paradigm is the economic realization that it takes energy to maintain existing order, and thus order itself has intrinsic energy value...and that is the core of the second law.

Rifken provides a summary of why the modern economies fail, “The overall resource base is considered inexhaustible and always available, in some form, for the right price. The entropy bill, on the other hand, is considered, if at all, as an externality of doing business and marginal to the overall costs of conducting commerce.”(p. 52). Rifken’s “entropy bill” is the 2nd law expense of the energy required to maintain order, an expense that grows with the increasing complexity of the system, “...the more evolved and complex the social organism, the more energy is required to sustain it. This simple reality flies in the face of orthodox economic theory. In fact, neither capitalism nor socialism is capable of accommodating the harsh ‘real-world’ realities imposed on society and the environment by the first and second laws of thermodynamics.”(p. 51). Modern economies eventually fail because available energy is finite, and energy is dispersed.

A complete energy economy would take into account the energy value of our other environmental resources–clean air, clean water, and sustainable agriculture--as well as the energy value of order, quite literally in the same units by which energy is sold. A complete energy economy would thus not just reward energy providers, but also order providers. If the true value of our goods and services were properly assessed in terms of energy, it would, in fact, cure our environmental woes, or at least strike the proper balance between our traditional economic values and the value of the environment, and it would decrease wage disparity. For a true energy economy to work, the currency of this economic system would need to track energy in its entirety, including entropy: the measure of spent energy, and the measure of energy inherent in order. Currently the energy of our valued economic production is provided predominantly by our traditional energy resources, whereas the energy that maintains the order of our life-sustaining ecosystems is provided predominantly by natural solar radiation, and is largely taken for granted.

As we shall see in the next essay, the hindrance to completing the energy economy stems from a lack of comprehension of the second law, a lack too often leading to fallacy in both our economic and environmental reasoning. Choices must be made, and the energy assets of order and debits of disorder, described by entropy, must be accounted to realistically move toward sustainability.

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