Should economists study physics?

In my last post I mentioned my intention to examine an article that presents a libertarian's take on environmentalism. The article in question is called "Environmentalism Refuted" by George Reisman and it can be found over at the mises.org website. I stumbled across this article while browsing through "anti-environmental" articles in a somewhat shocked state; having only recently discovered that anti-environmentalism is actually a real thing to which real people adhere.

I wrote a number of comments in response to Reisman's article. I was somewhat bewildered by the lack of rebuttals to his writings given how divorced from the real world they seemed. That was before I discovered that many of his points are clearly aligned with Cornucopianism and have thus been, indirectly, addressed by general critiques of Cornucopianism. Critiques include: Ernest Partridge's Perilous Optimism and Lindsay Grant's The Cornucopian Fallacies. Similarly, critiques of the devotion to economic 'growth' absented by concerns for limitations, would also count as counters to Cornucopianism. e.g., books such as Tim Jackson's "Prosperity Without Growth" or "Enough is Enough" by Rob Dietz and Dan O'Neill.

Before I progress I should disclose that I'm not writing this with the authority of an economist or a physicist. The closest I come to dealing with these fields is through my current inter-/trans-disciplinary Masters of Environmental Management studies, within which are both economic and physical science modules. I realise that this means some people will dismiss what I write as the rantings of an illiterate. C'est la vie! On the flip side, I perversely consider my non-economic credentials beneficial because, had I been inculcated in the ways of economic rationalism, I would possibly not find the writings of some (not all!) economists to be so simultaneously hilarious, horrifying, and unicorn-ridingly-removed from all semblances of reality. But, then again, economic rationalists may just be born that way, and no amount of inculcation will make me lose sight of social and ecological justice concerns.

The comments I make about Reisman's article are not designed to single Reisman out, as there are others who share his Cornucopianist, economic fantasies (e.g., Bjorn Lomborg, Julian Simon in "The Ultimate Resource" or Matt Ridley's "The Rational Optimist"). Reisman's article, "Environmentalism Refuted," does, however, provide some choice passages for commentary.

So, onwards with the comments:

Reisman may believe he is trying to refute environmentalism, but his article actually tries, unwittingly and unsuccessfully, to refute physics (along with a few other ‘hard’ natural sciences). But before throwing physics under the bus, Reisman, citing Carl Menger, provides a philosophical justification for rejecting the notion that nature provides humanity with any 'goods' at all. 'Goods character', by Menger's definition, requires the intervention of man to exist, from man's discovery of a material's properties and utility, through to his command and manipulation of the material to satisfy his need. As Reisman argues, the defining of 'goods character' has;

... immediate bearing on the subject of natural resources. It implies that the resources provided by nature, such as iron, aluminum, coal, petroleum and so on, are by no means automatically goods. Their goods-character must be created by man, by discovering knowledge of their respective properties that enable them to satisfy human needs and then by establishing command over them sufficient to direct them to the satisfaction of human needs.

Taking these ideas further, after asserting that nature provides no 'goods', but only 'matter and energy':

Thus, in one sense, the sense of useable, accessible natural resources—that is, of goods as Menger defines the term—the contribution of nature is zero. Practically nothing comes to us from nature that is ready-made as a useable, accessible natural resource—as a good in Menger’s sense. In another sense, however, the natural resources that come from nature—the matter, in the form of all the chemical elements, known and as yet unknown, and energy in all of its forms—are virtually infinite in their extent. In this sense, nature’s contribution is boundless.

Thus Reisman has argued that any crisis from impending resource depletion is moot, because nature simultaneously provides us with zero 'goods' and, with a bit of innovation, we will be able to utilise its infinite contribution of matter and energy. Voila! No more impending shortages.

The first point about nature providing zero ‘goods’ is nothing more than wordplay to negate the environment's contribution towards fulfilling human wants and needs. I accept that ‘goods character’ may be an important consideration in economic circles, where assessing and judging supply and demand in the market is part of the trade, but waiting until a ‘good’ lands in the marketplace, as some freshly commodified item, shows an abundance of hubris for the achievements of ‘man’ and a gross neglect towards nature's contribution. Without nature there is no material for man to manipulate into ‘goods,’ which Reisman does acknowledge when pointing out that nature provides matter and energy. However, arbitrarily electing points at which we deem things to be ‘accounted for’ is exactly the kind of philosophical, solipsistic justification that detaches economics from the real world.

In short, ‘goods character’ is meaningless philosophical navel-gazing when one is considering environmental issues, and provides a specious, arbitrary line at which said navel-gazer can dismiss both their own and humanity’s collective impact upon the environment, while simultaneously dismissing their complete dependence upon the environment. It is similarly singular in its anthropocentricism; oblivious to values that aren't commodified for human exchange, or to the 'free' benefits provided by nature that are essential for our survival (i.e. ecosystem services).

The second point about the natural world being infinite in its contribution is where physics starts to get bent through the lens of philosophy and economics. It seems that Reisman has progressed as far as the first law of thermodynamics in a closed system and not made it to the second law of thermodynamics. The first law describes the conservation of matter and energy. That is, matter and energy are neither created nor destroyed, only changed. In this respect, Reisman is largely correct about the presence of the quantities of chemical elements in the world (give or take a few rockets and meteors, and ignoring the big, gaseous ball of fire that swings across the sky every day). But Reisman has seized on the idea of indestructible matter and energy as a foundation for erecting the notion that this means the natural world provides us with an infinite pool of usable matter and energy. Unfortunately the real world works in more complex ways and the second law of thermodynamics, which describes how energy progresses from low entropy states to high entropy states, from order to disorder (that is, it dissipates), throws a proverbial spanner at the usability of these infinite, natural resources.

Reisman is correct that improvements in technology and knowledge allow for greater usage of hitherto unrecognised or underutilised resources, but at present we are not, to any significant scale, harnessing waste energy, or dissipated/dissipating energy, in appropriate quantities to balance our continued consumption of primary resources. Incandescent light globes, for example, function firstly as heaters, with 90% of their energy input being converted and released as heat, and secondly as light sources. In Reisman’s infinite resource world, this 90% of released ‘waste’ heat is still a part of his natural resource accounting because the energy has not been destroyed, only changed. Therefore it should not be considered as ‘waste’ energy but as an equal part of the infinite resource that nature provides. We can add car exhaust, heat from a combustion engine, car tire friction, jet engine turbulence, and countless other instances of dissipating energy as part of this infinite resource. Yes, maybe in the technologists’/cornucopianists' future all of these resources will be utilised effectively, and I know that great strides are being made in the capture of hitherto underutilised energy sources through cogeneration and trigeneration, but I doubt that Reisman’s thesis really aims at mastering the conversion of 'wastes' into 'goods' when he has explicitly written the article to refute the ‘reduce, reuse, recycle’ mantras of environmentalists. Perhaps I'm wrong, but all that I've read suggests that mainstream economists of both the neo-liberal and libertarian stripe, while championing the need for innovation, have little time for innovations aimed at reducing society's inputs while fossil fuels that are cheap (read: subsidised and costly, when you factor in resultant social, health and environmental damage) and boundless (read: "how far are we gonna have to dig for that in 100 years' time?" "Who cares!? That's for our grandkids to figure out!") are there for the taking.

The obvious failing of this "matter and energy" accounting of natural resources, aside from the entropy issues, is its disregard for the forms that said matter and energy take. From an ecological perspective natural capital is not a transferable asset. That is, the loss of one species or ecosystem cannot be balanced in the books by preserving a different species or ecosystem, or by doubling the quantity of some other ecosystem. (Biobanking and/or Biodiversity offsets are another kettle of monkeys for another time!). The net balance in the "natural resources" ledger may remain unchanged, but one will still be in the red if one is losing or exhausting "matter" that is of ecological significance. I think this is one of the key differences of perspective between mainstream economists and ecologists. The economist may say that, "Wood is wood is wood, and what is wood until it is a 'good'?" but the wood from an old-growth forest is vastly different in its ecological character and significance, from how it stores and processes carbon to how it supports other species, from young plantation wood. The economist seems content to substitute one for the other, once the primary option runs out, but the ecologist is not so keen on the "running out" aspect of the equation.

Reisman takes his Cornucopianism to infinity and beyond!:

Apart from what has been lost in a few rockets, the quantity of every chemical element in the world today is the same as it was before the Industrial Revolution. The only difference is that, because of the Industrial Revolution, instead of lying dormant, out of man’s control, the chemical elements have been moved about, as never before, in such a way as to improve human life and well-being.

Again, Reisman is right to note that there has been great progress made since the Industrial Revolution, and the quality of life for many (not all) humans is significantly better than it has been in any other time in history. Again this anthropocentricism is blind to the fact that "improving human life and well-being" affects non-human life and well-being, which will ultimately come back to negatively affect human life and well-being. As a crude example, if humans reduced their primary crop consumption to a single variety of plant, then the entire food supply would be compromised by a disease or pest that affects that single crop. This is why, even from an anthropocentric perspective, it makes sense to conserve biodiversity.

The other point about moving chemical elements about to "improve human life and well-being" sounds somewhat benign in econo-speak. When we've reduced nature, through the magic of economic rationalism, to a resource of infinite matter and energy, then the form of said matter and energy doesn't make much difference because the quantity remains constant. This is all good and well on paper, but again it doesn't factor in entropy and it shows a distinct non-appreciation of the earth's natural cycles (i.e., carbon, hydrogen, water, nitrogen, phosphate cycles). Regarding carbon, we’re currently experiencing a sharp increase in the amount of carbon dioxide in the atmosphere, with the milestone of 400 parts per million being passed in 2013. This is because carbon stores, in the form of fossil fuels that have been "lying dormant, out of man's control," have not been a part of the biosphere’s cycles for millennia. But now they have been extracted from the earth, burnt and released into the atmosphere. As benign as "moving some chemical elements about" may sound, the reality is that we are adding foreign chemicals to our atmosphere at staggering and increasing rates and, I repeat, these chemicals have not been a part of the earth's biosphere for millennia.

Reisman continues his assessment of "moving chemicals around" to "improve human lives":

For instance, some part of the world’s iron and copper has been moved from the interior of the earth, where it was useless, to now constitute buildings, bridges, automobiles, and a million and one other things of benefit to human life. Some part of the world’s carbon, oxygen, and hydrogen has been separated from certain compounds and recombined in others, in the process releasing energy to heat and light homes, power industrial machinery, automobiles, airplanes, ships, and railroad trains, and in countless other ways serve human life. It follows that insofar as man’s environment consists of the chemical elements iron, copper, carbon, oxygen, and hydrogen, and his productive activity makes them useful to himself in these ways, his environment is correspondingly improved.

Consider further examples. To live, man needs to be able to move his person and his goods from place to place. If an untamed forest stands in his way, such movement is difficult or impossible. It represents an improvement in his environment, therefore, when man moves the chemical elements that constitute some of the trees of the forest somewhere else and lays down the chemical elements brought from somewhere else to constitute a road. It is an improvement in his environment when man builds bridges, digs canals, opens mines, clears land, constructs factories and houses, or does anything else that represents an improvement in the external, material conditions of his life. All of these things represent an improvement in man’s material surroundings—his environment. All of them represent the rearrangement of nature’s elements in a way that makes them stand in a more useful relationship to human life and well-being.

Thus, all of economic activity has as its sole purpose the improvement of the environment—it aims exclusively at the improvement of the external, material conditions of human life. Production and economic activity are precisely the means by which man adapts his environment to himself and thereby improves it (p. 90).

If you ever need a textbook example of anthropocentricism, look no further than the above excerpt. Aside from the hubristic disregard for all things that do not benefit ‘man’, the underlying problem with this line of thinking is...oh wait, it’s still hubris. The hubris here, however, is the belief that ‘man’ holds the optimum judgement position for determining what constitutes an improvement, even if that improvement leads to long-term, environmental degradation. Reisman also engages in the philosophical wordplay that would see any change to the environment that suits ‘man’ being described as an ‘improvement of the environment.’ This neatly parcels up and throws out any consideration for environmental degradation, because 'degradation' in the way that a biologist, ecologist, geologist or the average human being might define it, ceases to exist when you deconstruct language and reconstruct it to exclude normal usage of words. The only degradation Reisman might acknowledge in such circumstances is one that has a negative effect on 'man's' livelihood, but given that climate change itself is one pertinent environmental impact that Reisman doesn't care for, it seems unlikely that he would acknowledge any form of degradation that an environmentalist might highlight.

Reisman has, just as he has with his description of nature providing no ‘goods,’ elected an arbitrary point at which he can dismiss all prior events. For example, turning on the light switch has improved my current environment as I can now see clearly despite it being night-time; so all inputs into making this improvement happen must be deemed improvements to the environment, even if they entail the continued destruction of unique landscapes and species through fossil fuel extraction and burning (Note: I'm on 100% Greenpower, which isn't wholly renewable energy but it means that every kWh I use must be matched by a kWh sourced from renewables by my energy provider).

Reisman ends his foray into refuting environmentalism physics with the usual libertarian response to any problem: free markets and individual responsibility (but only if you feel like being responsible… you don’t have to if you don’t want to... there there).

A rational response to the possibility of large-scale environmental change is to establish the economic freedom of individuals to deal with it, if and when it comes. Capitalism and the free market are the essential means of doing this, not paralyzing government controls and "environmentalism." And both in the establishment of economic freedom and in every other major aspect of the response to environmentalism, the philosophy of Ludwig von Mises and Carl Menger must lead the way.

No. Just no. We should not have philosophy leading the way, with individual economic reactions to ‘externalities’ being all we can rely on to deal with global, intergenerational problems that are already in motion (and not being dealt with!). Far from being paralysed by "government controls and 'environmentalism'", it is the libertarian exaltation of the individual that paralyses any meaningful response to our collective impact upon the world, and upon the world that future generations will inherit, because it ideologically refuses to limit (i.e., “force at gunpoint” in liberty-speak) the actions of individuals for the benefit of the planet and all of its inhabitants, human and non-human.

Reisman has attempted to go further than simply ignoring the collective impact on the environment by redefining any impact that improves ‘man’s’ livelihood as an ‘improvement to the environment.’ The irony is that Reisman’s ‘improvements on the environment’ will and have already lead to ‘non-improvements on man’s environment.’ Climate change, pollution, loss of biodiversity, threats to water and food security, and degradation of ecosystems and ecosystem services are already under way. How is the "economic freedom of individuals to deal with it, if and when it comes" going to help when the problems are already here while the free individuals remain blind because they've been sold the Kool-Aid of Cornucopian optimism?

To end this post I should probably ask: does all of this need to be said, or is it blindingly obvious to other people that myopic, economic rationalism provides more problems than solutions to environmental challenges, because it simply pretends that everything is going well so long as people can fulfil their hedonistic desires through the marketplace (and as long as the GDP figures look good)? Don't get me wrong, market solutions to environmental challenges do exist, but the exaltation of the marketplace, which does not exist to meet the needs of the ecosystems we live in (and wholly and utterly depend upon), cannot be relied upon to address the intergenerational problems that we have been, and are, setting up.



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