What you are talking about here is a pell-mell collapse of current economic and political institutions, not a managed transition to a sustainable paradigm.
Sustainable work-arounds and substitutions are starting to appear in the form of electric vehicles and increasingly affordable sustainable power generation. High speed electrified freight and passenger train transport are starting to emerge. And, in the US, the Secretary of Agriculture, Tom Vilsac, is pushing the potential for offsets and new profit potentials for farmers as means of mitigating the impact of carbon taxes. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
But this model does not really deal with the transition from the current industrial infrastructure to a hypothetical sustainable infrastructure. As long as there exists a need for sustainable capital plant, there is a dimension in the production area that aggregate demand can be expanded into. So with only a little bit of finesse, standard Keynesian prescriptions for achieving full employment can be utilised during this transition.
This model deals with the endpoint of the transition, where the sustainable capital plant is fully phased in, and there is still surplus man-hours available. Since the sustainable capital plant is fully phased in, these man-hours by definition cannot be put to work in building a sustainable capital plant, and so standard Keynesian policy prescriptions will fail to ensure full employment.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
But much of the capital equipment and all of the skilled labor can be employed elsewhere, provided sustainable energy and material resources are available. In theory, extrapolating from existing technology, it is possible that graphene or other forms of carbon nano-tubes could be produced from atmospheric CO2 or from industrial sources and used to make composite structures, and being constrained for CO2 as a resource would be cool, as it would likely lead to cooling.
Why should constrained production of gasoline fueled automobiles be any more of a limit on economic activity than are buggies. Price and performance could well make them obsolete before availability of gasoline at any price will.
Of course there are finite limits to total production, but I am not sure we have properly identified them. And while your example of automobiles and gasoline are used as a stand-in for the entire economy, the fact that it is a simplification cannot be ignored despite the fact that evaluating the manifold of all available product/resource PPFs is vastly more complex. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
Sometimes.
But this diary does not deal with those situations. From an economist's point of view, those situations are straightforward: Stop doing stupid things, start doing smart things, and have a helping of Ye Olde Ordinarie Keynesian Fiscal Policy.
If you think automobiles will be (or should be) fully phased out before serious raw material shortages hit gasoline production, feel free to substitute solar panels and high-voltage transformer stations for gasoline and automobiles.
But having a more complicated economy does not help you. The arguments advanced here generalise in a straightforward way to an n-dimensional economy - but n-dimensional manifolds are rather harder to draw.
Given the trends in automation, population and education we are already facing problems of too many people for the necessary jobs. This is exacerbated by the dominant ideology, the existing patterns of wealth distribution and current corporate and government policies. And those patterns and policies driven by those ideologies are producing more and more strains and imbalances.
Manufactured good are produced in low wage countries such as China, which maintains a fixed peg to the US dollar for its currency in order to maintain a competitive price for its goods in the USA. But even at that rate they accumulate macro-economically significant reserves of US dollars in various instruments. But even that does not enable China to grow at a rate the government sees as necessary to absorb the enormous reserves of labor from the countryside. So they have built roads, bridges and railways many reportedly unnecessary, and entire unoccupied cities.
Meanwhile, shipping all of the jobs for consumer manufacturing to China has hollowed out the US economy so that for the last decade imports were financed by money extracted from the real estate bubble that broke in 2008. When that bubble broke there was nothing really to fall back on. The USA can no longer import enough consumer goods from China to satisfy China's need to be an export driven economy on a scale adequate to their social needs. Europe is unlikely to step into the gap and no one else can afford to do so.
But even worse, the logical extrapolation of existing trends is for the production of manufactured goods to be increasingly automated. As a similar trend played out in US agriculture, all agricultural output was generated by a few percent of the labor force. If only that portion of the production chain for manufactured goods that involves US labor is considered, then we are approaching a similar figure for manufactured goods. Worse, the same process has made retail more efficient, thereby reducing retail employment also.
Looked at from a wealth distribution point of view, when <1% of the population hold >90% of the wealth the economy has to suffer. This is similar to the situation that J.A. Hobson analyzed over a century ago in Imperialism. In order to avoid giving labor in the U.K. a larger portion of earnings so they could purchase goods, markets and investment opportunities were sought in captive colonies. But we are now at the limits of that or more subtle forms of imperialism and they are no longer a useful options.
Given the mess we have made with money, debt and finance it would seem likely that the limits of our current ideology as embodied in financial capitalism is likely to be a limit before resource constraints are. The sooner the better as far as I can see. Were we able to see that our existing ideology is leading us over multiple cliffs simultaneously, perhaps we could consider alternatives. If we could figure out how to place a value on the survival of the next four generations that is equal to or greater than the value we place on return on investment over the next year or even ten years, we would be more likely to find our way out of the dilemmas of climate change and resource limitation, but the "solution" is likely to involve the premature deaths of a very large fraction of the world's population over the remainder of this century as things stand. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
They aren't.
Income distribution is important, but that is only incidentally connected to jobs.
I think that was the point at which THE POWERS THAT BETM concluded that he was "un-sound" and encouraged the development of "sound" theories to be taught in the institutions which they endowed. This gave us Neo-Classical Economics, brought to you by Anglo-American capitalism, the long term practice of which is now known by some as "The Anglo Disease." As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
The point of production is consumption.
The point of production is slavery organised for personal profit. Accidentally, progress for the common good occasionally falls out as a side effect - usually only after it's demanded. But it's a side benefit, not the main event.
It's not just about Jobs™ - it's about the realisation that beyond a certain point it's impossible to run an economy for purely material ends.
If you expand production to include non-material benefits - creativity, scientific investigation, personal development, innovation, increasing psychological and social maturity - then physical constraints become much less important.
You could, in fact, have a steady-state material economy with closed resource cycles, and efficient energy use, underpinning a booming and potentially expansive non-material economy.
People would have to get used to buying and wasting less crap, but there might be benefits to that model they haven't yet experienced.
The real problem is the cult-like nature of the economic religion, and its strictly limited beliefs about what constitutes good experience.
You can't understand economics algorithmically. It's entirely a ritual activity, not a rational one, and the only way to disinvent it is to replace its rituals with more survivable ones.
The term had fallen out of general use but Milton Friedman brought it back in the '60s. My own view is that, prior to Time Magazine's "God is Dead" cover, the vast majority of US citizens believed that the USA was protected by God's providence, so there was no scope for an "Invisible Hand" theory, except, perhaps, as the "Left Hand of God" As this view began to lose traction, a bowdlerized version of Adam Smith's metaphor was put forward as a more secular version of Divine Providence. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
