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The Economic Implications ofThe Maximum Power PrincipleFor a Sustainable Society
ISBPE 2016, 28 JuneBy: Garvin H BoyleEmail: [email protected]: Orrery-software.webs.com
A GOLDILOCKS CURVE
Evolution of Energy Transformation Towards Maximum Power at an Intermediate Level of Efficiency
NeoClassicalEconomic
Theory
Sampling of Theories Why Global Affairs are NASTY, UNJUST, AMORAL AND UNSUSTAINABLE.
By: Garvin H BoyleEmail: [email protected]: Orrery-software.webs.com
NeoClassicalEconomic
Theory
European Colonialism
American Hegemony
Conflict Between The
Great Religions of the Middle
East
Warring Nations, Blocks of Nations, and Empires
Conflict Between The Great 20th Century Political Ideals
– Fascism, Communism, Naziism,
Democracy, CapitalismConflict Over
Resources
Globalization Multi-National Corporations
A MODERN COHORT OF SUSPECTS
The evolution of large dinosaurs, and large mammals
And The evolution of large empires, and large multi-national corporations!
What is the Common Thread?
The explosive emergence of algal blooms, locust swarms, or
contagious epidemics And
The explosive spread of telephones, televisions and, now, iPhones!
Adaptive radiation of species
AndTechnological innovation!
The intense emphasis of all species on growth and
reproductionAnd
John Kenneth Galbraith’s “Theory of the Firm”!
The emergence of life from the seas onto the barren land
And The emergence of our
dependence on fossil fuels!
THESE CANNOT ALL BE MERE COINCIDENTAL ANALOGIES.
---THESIS: THERE MUST BE A COMMON DEEP ENERGY-DRIVEN DYNAMIC THAT
ANIMATES ALL OF THESE PHENOMENA.
A.J. Lotka’s Maximum Flux (1922)
SOURCE: A.J. Lotka (1922) 'Contribution to the Energetics of Evolution', Proceedings of the National Academy of Sciences of the United States of America, Vol. 8, No. 6 (Jun. 15, 1922), pp. 147-151.
… natural selection tends to make the energy flux through the [organic] system a maximum, so far as compatible with the constraints to which the system is subject.
… in evolution two kinds of influences are at work: selecting influences, and generating influences.
The question was raised whether … man has been unconsciously fulfilling a law of nature, according to whichsome physical quantity in the system tends toward a maximum. This is now made to appear probable; and it is found that the physical quantity in question is of the dimensions of power, or energy per unit time … .
Natural Selection Rising energy flux
“Generation” versus
“Selection”
Application to Human Economic Systems
H.T. Odum’s Maximum Power (1955)
SOURCE: Odum, H. T., Pinkerton, R. C., “Time’s speed regulator: The optimum efficiency for maximum power output in physical and biological systems”, American Scientist, Vol. 43, No. 2 (APRIL 1955), pp. 331-343.
Our proposition is that natural systems tend to operate at that [intermediate] efficiency which produces a maximum power output.
Let us make the following postulate: Under the appropriate conditions, maximum power output is the criterion for the survival of many kinds of systems, both living and non-living. In other words, we are taking "survival of the fittest" to mean persistence of those forms which can command the greatest useful energy per unit time (power output).
“Power” versus
“Efficiency”
Application to Human Economic Systems
GOLDILOCKS EFFECTGenerates Variation
Selection Among the
Variants
MPP – At the Nexus of Many Concepts
Hierarchy of Persistent Forms 0 ------------------------------ 1Intermediate Efficiency,
Maximized Power
Pow
er
SPECIES
DARWIN
ENERGY PATHWAYS
SYSTEMS
LOTKA, O
DUM
ODU
M, PIN
KERTON
Natural Selection & Evolution
DARWIN
Hypothesized as Broadly Applicable: physical,
chemical, biochemical, biophysical, social,
ECONOMIC
LOTKA, O
DUM
ISSU
ES O
F AC
CESS
Access to Energy of Suitable Type and
Availability
Access to Matter of Suitable Type and
Availability
BOLTZM
ANN
, LOTKA, O
DUM
Efficiency
Two Definitions of Power(Biophysical Setting – ENERGY TRANSFORMATION AND CONSUMPTION EVENT)
• Useful (or Profitable) Power• Waste (or Operations and Maintenance) Power
ENERGY INPUTS
USEFUL ENERGY FLOWWASTE ENERGY FLOW
Puseful = Euseful / T
Pwaste = Ewaste / TT = time
EFFICIENCY DEFINED AS = Euseful / Etotal
Two Definitions of Power(Economic Setting – COMMERCIAL PRODUCTION AND SALES EVENT)
• Useful (or Profitable) Power• Waste (or Operations and Maintenance) Power
TOTAL INCOME(I)
BENEFITS (B)COSTS (C)
Puseful = B / T
Pwaste = C / TT = time
EFFICIENCY DEFINED AS = B / I
Selection For:• Maximal average Pu
• Minimal average Pw • Minimal average entropy
production per event
LOWER LEVEL- Per event effects
Antithetic Dynamics Of The MPP
Odum and Pinkerton
Lotka
Selection For:• Maximal overall Pw
• Maximal overall entropy production
• Maximized flux of matter and energy
HIGHER LEVEL- Overall process effects
The Goldilocks Hypothesis(A key component of the MPP)
• Assumption: For every flow of benefits, there are inputs which are consumed in the process of producing that flow. (E.g. # of workers)
• Hypothesis: For every such input, there is an optimum rate of consumption for which the rate of production of benefits is optimized, the consumption of all other inputs being held constant.
EXAMPLE:• In a city of 1 million people, crime has a daily cost.• Police officers reduce the crime daily, creating a
daily flow of benefits from reduced crime.• One police officer is not enough. • 10,000 police officers is too many.• There is an optimum number of
police that will optimize the rate of flow of benefits (the USEFUL power).
POLICE BEN
EFIT
S
1 10,000
The Goldilocks Hypothesis(A key component of the MPP)
Goldilocks Curves(Plot of Puseful versus )
INCOMECOSTS
BENEFITS
USEFUL POWER & POWER INDEX
EFFICIENCY
PLOT: POWER INDEX VS EFFICIENCYPLOT: I,C&B VS WORKERS
Goldilocks Curves(Plot of Puseful versus )
Gallery of Goldilocks Curves(Plot of Puseful versus )
Co-Evolution of a Trophic Web
Selection For:• Maximal average Pu
• Minimal average Pw • Minimal average entropy
production per event
LOWER LEVEL- Per event effects
Odum and Pinkerton
POW
ER
CON
SIDE
R 3
ENER
GY
PATH
WAY
SBI
OM
ASS
OF
THRE
E PA
THW
AYS
THE MPP – CO-EVOLUTION AT MANY LEVELS
SYSTEM LEVEL
AGENT LEVEL
PROCESS LEVEL
INTER-SPECIES GOLDILOCKS CURVES
DETERMINE FITNESS OF ENERGY TRANSFER
GENETIC DIVERSITY PROVIDES VARIATION IN
GOLDILOCKS CURVES
MAXIMUM USEFUL POWER
MAXIMUM WASTED POWER
INTER-SPECIES ENERGY TRANSFERS EVOLVE
ORGANISMS EVOLVE
END-TO-END ENERGY PATHWAYS EVOLVE
THE ENTIRE SYSTEM EVOLVES
POWER DETERMINES FITNESS OF ENERGY
PATHWAYS
COMPLEXITY PROVIDES VARIATION IN POWER OF
ENERGY PATHWAYS
Galbraith’s Theory of the Firm(As explained by the MPP)
Excerpted from: http://economistsview.typepad.com/economistsview/2006/04/john_kenneth_ga.html
• The neoclassical theory of the firm concludes that … firms attempt to maximize profits.
• According to Galbraith:• this may be true in the market sector, where owners
of small firms actively manage their enterprises, but • does not describe the far more important planning
sector – the 2000 or so largest firms that produce over half of society's output.
• The central protective purpose of the firm is survival:• to earn a profit sufficient to keep most stockholders
relatively happy, and • to provide sufficient retained earning for investment
and growth.
A
B
Galbraith’s Theory of the Firm(As explained by the MPP)
A)Staffing
level with maximum efficiency
B)Staffing level with maximum flow of returned benefits (Max Power)
Complexity Enhancing Effects of the MPP(Adam Smith’s Invisible Hand Revealed)
• Innovative Variation: sophisticated and innovative business models may enhance the power of an entire supply chain
• Such complex supply chains will persist and grow, increasing the flow of energy and the average complexity of the business milieu.
COMPLEXITY POWERThere seems to be some sort of positive feedback between power and complexity.
E&$
E&$
E&$
E&$
E&$ Barter
Commodity Money
Gold and Silver Coins
Electronic Trading
Bills, Stocks, Bonds
Risks, Futures, CCOs, CDSs
E&$
RISI
NG
CO
MPL
EXIT
Y AN
D CO
ST O
F M
AIN
TEN
ANCE
THE MPP AND RISING COMPLEXITY EXAMPLE – A MONETARY SYSTEM
E&$
E&$
E&$
E&$
E&$ Barter
Commodity Money
Base Metal Coins
Electronic Trading
Bills, Stocks, Bonds
Risks, Futures, CCOs, CDSs
E&$
FA
LLIN
G CO
MPL
EXIT
Y AN
D CO
ST O
F M
AIN
TEN
ANCE
THE MPP AND FALLING COMPLEXITY EXAMPLE – A MONETARY SYSTEM
E&$
E&$
E&$
Teleology and Science• Teleology – The consideration of purpose,
intention or plan as a causative agent.• As part of the Renaissance, at the birth of
science, in the 1500s, it was decided that all exogenous teleological causes would be excluded from consideration.
Teleology, Science and Business• NCE ASSUMPTION: People succeed in
business because they intend to, and make plans to succeed.
• THIS IS CLEARLY A QUASI-RELIGIOUS TELEOLOGICAL, BUT FALSE, ASSUMPTION – Who among us plans to fail?
The old “free will versus predestination” conundrum.
Pruning Effects of the MPP(Adam Smith’s Invisible Hand Revealed)
• Business Model Pruning: those supply chains that consume matter and energy at the greatest rate (at maximum power) will persist, dominating existing markets and expanding the most quickly into new markets, driving others out.
• Teleological Pruning: those purposes, intentions and plans that align with the effects of the MPP will persist, while those that do not so align are pruned away.
TREE
OF
GOO
D IN
TEN
TIO
NS
AND
GREE
N B
USI
NES
S M
ODE
LS
NCE
MY POINT IN ALL OF THIS?• Our global economic system is
NOT REMOTELY CLOSE TO SUSTAINABLE.• We are captured and being dragged
along by a complex, powerful and remorseless dynamic that automatically thwarts all attempts to stop it.
• If we don’t put time and energy into understanding it, we are doomed to go with it, right to the final curtain.
QUESTIONS?