What value is the job I do? How much should I be paid for my efforts? How would an energy-based economy be better than one where money is just, well, money?
It all starts with human effort, and human effort is based on biology. Each of us is a micro-economy. We take in food which carries high energy chemical bonds in carbohydrates, fats, and proteins. Digestion breaks these molecules into smaller pieces that can then be metabolized by the cells of the body.
Each cell is a mini-citizen of the body, extracting energy-rich molecules (sugars, fatty acids, and amino acids for the most part) from the blood stream in exchange for some form of work that they do. Some cells do mechanical work (like muscles), some do repair work, some do electrochemical work (like neurons). All do their jobs and are bathed in a rich nutrient environment.
And when all of our cells are doing their jobs, we do ours. Our main job is getting more food. It really is pretty simple. Though what we do to get more food isn’t. We also have a biological mandate to get enough extra food to allow us to replicate ourselves and feed our offspring. That too is a complicated affair (especially when they get to be teenagers!)
At this very fundamental level, economics is all about energy. Food provides chemical building blocks for making new tissue, repairing, etc. But these chemicals are part of a large recycling loop that assures that our biomass expands as life designs. Energy, on the other hand needs to be continually captured in the food bonds, starting with photosynthesis and, through stages, biosynthesis of starches, proteins, etc. All of the energy in the food you eat started out as photons kicking electrons far out of their orbital, driving an electrochemical process that ends up making your life possible. You are realized sunshine.
Life is energy flow. Symbolic thinking, that apparently unique capacity of the human brain, is energy flow. But it is more than just energy flow. It is energy flow that guides and shapes other energy flows. Intelligence and knowledge act as the energy flow amplifiers of life. Intelligence invents tools and tools make it possible to use other energies more efficiently. For example, early man invented spears to make it easier and quicker to obtain food. The brain exerts some energy to guide the hands and muscles to construct a special shaped stick. That is an amplifier/information processor at work, directing work. The muscles use energy to make the spear.
But the method of hunting using the spear requires less use of energy per unit of energy gained in the hunt. So as a result of a small energy investment, a large energy gain is made. And excess energy (above feeding self, mate, and offspring) can be shared.
Energy subsidization for the purpose of maintaining a favorable thermal environment lowers the metabolic need to produce heat just to keep the body temperature in the right range. Building an enclosure and a fire, constructing and wearing clothing satisfy that need. Humans, again, invest some of the energy that would have gone into finding food to construct long-lived artifacts that will, overall, save much energy in the future. And humans find sources of stored sunlight (wood) that are exothermic once heated, providing a source of heat to keep warm and cook food (thus extracting even more energy at a lower digestive energy cost!)
Everything humans do is about finding more energy sources or finding ways to get more work out of the energy they have to expend. It is hard for modern humans to grasp this since technology has become so sophisticated that most of us don’t realize when we are using energy or in what quantities. Long ago humans knew what effort was needed to produce goods and services. They knew how to calculate the energy equations in their heads even before they knew what energy was, technically. But now we have no more idea of what it takes to make an iPod than how one works. We’ve lost our contact with nature.
The proposal to set an energy-based standard for monetary units is based on the above simple facts of life. Once, long ago, humans could gauge the value of things because they had some sense of what effort it would take to replicate the thing they sought to acquire. If a neighbor had developed a skill at making that thing, and you had skill at making something the neighbor wanted, then both you and your neighbor could come out ahead in the energy gain game if you traded. All that was needed was some kind of exchange rate that allowed comparisons of apples and oranges (so to speak) or goats and chickens. Money came to fill that need.
The invention and deployment of money wasn’t based on explicit knowledge of its relationship to measuring energy. Indeed, the first gold coins were valued because they represented something rare and beautiful. Humans probably lost the mental connection between coins as fractional measures of effort and the energy basis upon which effort is made.
In the present day, how many people think about their jobs as being efforts to increase the available energy for the future. How many really think about the relationship between what they do and the food on their table, other than in some very abstract way: if I don’t get a paycheck we don’t eat! Yet the relationship still exists and it is very real. That you pay money to the grocer to take home the night’s dinner doesn’t mean it isn’t still a trade of energy units. It just no longer represents it.
A person’s job, what work they do, these days might not be manual labor. Many more people sit in front of a computer screen and type, point, and click their way through a day. This is the work they do. But their brains are expending energy doing it. Their bodies expend energy moving through the day. Their families still need nourishment. The kicker today is that we no longer have any sense about what our personal job’s relationship to energy flow is than we realize that it’s all about energy flow in the first place. What do you do for a living (see the language reveals a deeper meaning!)? Most of us want to believe that what we do is meaningful somehow. We no longer do work that is directly connected with the energy economy per se. A carpenter building a house is still doing something that clearly increases future net energy. You may quibble about the wastage of energy that the house may represent, but so far as the comfort of the occupants is concerned, this is just as valid a form of energy subsidization as the hut was for our ancestors.
The television repair man (when we used to actually try to repair them), it’s not so clear how his efforts lead to increased energy. And a stock broker? In this day and age, I would argue the stock broker (as well as the banker) is actually doing the opposite. Using extensive energy resources his work is to ‘churn’ supposed value in an attempt to create new money (Fiat) even when no new energy is being made. This is the conundrum.
The average American needs about 2000 kilocalories (Calories) or a little less than 480 kilojoules of energy every day. Adult men need much more, children obviously need less, but still a fair amount to subsidize their growth and development. I’m using the average American as an example. We can argue about how healthy the American diet is in the future. This is just for illustration purposes. This is the starting place for understanding an energy basis for the economy. Fundamentally we need to produce enough food to satisfy every citizen’s caloric needs every day.
A percentage of that energy is used to do work. I’ll focus on the adults for now. An adult works about 8 hours, five days a week. About 20% of their energy is devoted to labor. So, just to be a little bit specific, about 95 kilojoules are used in productive work (this is really simplistic and doesn’t account for things like cleaning the house or cooking the meals, etc.) five days a week or, in other words, an adult uses one whole day’s worth of energy spread out over the work week.
The adult expects to get paid for that work. The paycheck, at very minimum, needs to cover the basics of house rent (or mortgage), food (more energy), clothes (energy conservation), and now days, transportation, entertainment, etc. for the entire week and covering the needs of the whole family. The only way we can justify paying the worker more energy than they expended in the work is that their work should have, in an ideal case, been directed at creating more net energy in the future. Even someone whose job it is to demolish an old building is contributing to the future increase in energy (in living systems it takes both anabolism — building — and catabolism — breaking things down — to produce healthy cells).
People who work mostly with their brains, so-called knowledge workers, are presumably using their intelligence and knowledge maximally to direct information flow so as to cause other work to be accomplished. In an ideal world, this knowledge work acts to control the flow of energy and work such that the whole economy realizes a net gain in the availability of energy. Remember my post on hierarchical control systems? The world, however, is far from ideal. Today there are two major reasons why intelligence is no longer being optimally applied to energy gain. The first is the complexity of the modern world has made it obscure as to what tasks actually need to be done. More work effort is being applied to frivolous tasks that no longer contribute anything meaningful to the overall purpose of the economy. Ever since the western world has turned to consumerism based on debt financing, we have increasingly assigned work to producing items that in no way improve life by increasing net energy. What little manufacturing is done in the US, for example, is directed at toy creation — iPods and Hummers are examples. The rest of work effort is assigned to creating the illusion of wealth, the financial and general service sectors. The former is particularly egregious in that its whole purpose appears to be the creation of faux-money out of speculative bidding and fractional reserves. All of that work effort being put into working a magic act, to create an illusion that all is well with the world if we just keep spending.
The second problem is that even in areas of work that do contribute to real wealth production, the tasks are still complex and probably not well understood in terms of the big picture. Here we run into a fundamental problem of the knowledge and the rational thinking needed by people involved in this work is only poorly had. You may have read some of my earliest tirades against the education system in its growing inability to educate people vs. training them for their role as cogs in the wheels of the economic engine. By putting so much emphasis on the latter we have actually damaged the former.
Educated people are more adaptable and can transfer their learning and skill to more work situations. They are more valuable to an evolving economy. They can work smarter in any job they take on. But our education system is now geared to make specialists out of people; get them ready for the job market. What we never do is educate them about what the jobs are really about or why they are valuable to society (if they are). Our business schools are pumping out financial majors who earnestly believe life is all about making money. But they never have a clue that money is just a representation of energy (or should be). They never find out that you can’t create energy out of nothing, say for example by simply bidding the price of something up.
In the money = energy world people would be paid in energy credits (dollars fixed to an energy standard) according to how their efforts had helped increase or maintain the availability of energy for the whole of society to do useful work. The investment of one joule of energy expended by a worker needs to produce enough joules to support his or her non-productive family members (meaning the energy needed to build and warm the house, support farming for food, etc.) as well as create some excess to be saved away for a future rainy day. Some of that excess would go to support construction and maintenance of infrastructure and security. A bit more excess would go to support exploratory efforts in science, engineering, and the arts.
The economy in such a world would actually work much as it does now, but without the distortions that obtain from not having a solid basis for valuation. People who invent methods to improve our energy efficiency, people who educate our young to live truly productive lives by working smartly, people who develop new sources of available energy, people who manage the growth of our food, all of these kinds of jobs would be valued most highly perhaps. People who entertain us, help us recreate our mental and physical states, just as needed (and not mindlessly overboard) would be valued to the extent that the rest of us feel refreshed and able to continue our productive lives. Most importantly, all work would be meaningful work. It would be apparent how any task contributes to the commonwealth. People could better appreciate their role in the world. Dilbert would be out of business.
George Mobus author April 2008