Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Excellent Diary.

I think that Soddy had it right insofar as he was dealing with a "material" economy with obviously finite limits to growth if we use a "deficit-based" Money based upon claims over material wealth.

But Soddy wrote the quote you use

Unlike wealth, which is subject to the laws of thermodynamics, debts do not rot away with old age and are not consumed in the process of living

before the massive growth in the "immaterial" or "Knowledge" economy.

Intellectual Property does not "rot away" - although it may be superseded, and less valuable, it exists for ever - and therefore entropy does not apply to it.

I believe that the infinite nature of IP is the key factor (coupled with direct global connectivity) changing our Society in ways that we have yet to understand. I do not think Soddy's linear assumptions apply in respect of it, and we must therefore look down the non-linear road, and consider the relevance of Quantum Mechanics.

That is part of what I was trying to get at in this untutored ramble

Knowledge-based Value and Intellectual Property

It follows that I think that the future lies in "Smart Growth" and the better use of the finite resources we have, in  addition to a new take on the financial market infrastructure we use.

Moreover, I think that the release of the use value of IP, as opposed to physical resources that is already generating huge real economic value, and that this is only the beginning.

Bangladesh is a case in point: one of the biggest value generators in Bangladesh, which employs of the order of 250,000 people, apparently, is Grameen Phone.

This is the JV between Yunus' Grameen Bank (which funds the myriad "village phones" and the entrepreneurs who operate them) and the Norwegian Telco, Telenor.

One of the consequences of this knowledge-based generation of value is also, IMHO, the "Death of Inflation", as (infinite) knowledge largely comes to replace (finite) Labour.

The problem is that we continue to allow private Capital to accumulate the fruits of this increasingly smart growth as they have done the fruits of the growth in "material" wealth/ Capital.

IMHO the solution to this is to apply a tax/ levy upon the privilege of private "ownership" of the Commons of Knowledge, in the same way that we should do in respect of the "Commons" of Land, where Henry George got it right, but was airbrushed from economic history.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Tue Mar 11th, 2008 at 02:41:15 PM EST
I react strongly (and negatively) whenever somebody describes Quantum Mechanics as "non-linear." Quantum Mechanics is a linear theory. In fact, linearity is axiomatic to QM.

QM is strange and interesting in a lot of ways. But non-linearity isn't one of them.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Mar 11th, 2008 at 03:17:26 PM EST
[ Parent ]
I will take your word for that, Jake, and stand corrected.

But I guess what I am getting at is that the equation that applies in the economic era we are now entering is e=mc squared, where e = "economic value" and c relates to connectivity...

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Tue Mar 11th, 2008 at 03:31:03 PM EST
[ Parent ]
Then you'll probably want to look into the mathematics on neural and scale-free networks.

Migeru has some interesting ideas about analogies between thermodynamics and economics and fluid dynamics and economics.

But all of these areas are a bit far afield from my own area of expertise.

The dynamics of nonlinear differential equations might also be worth a shot (i.e. classical chaos theory - but if you google nonlinear differential equations, you'll get less pseudophilosophical crap than if you google chaos theory).

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Mar 12th, 2008 at 10:06:39 AM EST
[ Parent ]

It'd be nice if the battle were only against the right wingers, not half of the left on top of that — François in Paris
by Carrie (migeru at eurotrib dot com) on Wed Mar 12th, 2008 at 03:02:51 PM EST
[ Parent ]
I'm with you on a lot of this.  This diary is a cross-post from the Daily Kos, and there I replied to a comment similar to yours.  Let me see....

Ah!  Here--something I said in the Daily Kos diary in reply to the point that an information econony doesn't use a lot of matter and energy]

The limiting case is probably "information worker"--people who get a living by moving pixels around.  To do that takes some matter (the computers are made out of something) and energy (electricity, heat or AC, food), but the value added seems much larger than the physical inputs.

Some people say that services are layered atop the traditional extractive, matter-and-energy work of the economy, which never went away in a real sense.  We in the U.S. might tend to forget that, since many of the "smokestack" industries of yore have gone overseas; but we still depend on them.  We use more steel than we did three decades ago, but we make way less steel than we did then.  


I wrote in reply to someone in the other diary that I linked to this one that an alternative way to view factors of production is to see them in these three categories:  matter, energy, and intelligence.  Certainly products (and services, like medical services) in which a high degree of learning/design/information/knowledge is embedded have a higher value-to-matter/energy ratio that stuff like, oh, iron ore.  But just about everything partakes of all three.  Growth in the intelligence/design/knowledge part of everything will let us save matter and energy, and let us achieve efficiencies that reduce (or slow the growth in) the ecological footprint of economic activity.  

Henry George, airbrushed from history: yes.  Interesting that he was advocating a single tax on land, as the prime productive asset.  Land is the  great net by which we capture current solar income, which (eventually, I believe) we will have to learn to live within.  And some people advocate a single tax on low entropy, or on carbon:  get rid of the income tax and tax the thing that leads to externalities, the extraction of valuable matter and energy from nature.

Industrial society is not sustainable. Unsustainable systems change--or disappear.

by Eric Zencey (Eric dot Zencey at UVM dot EDU) on Tue Mar 11th, 2008 at 03:45:46 PM EST
[ Parent ]
Eric Zencey:
Land is the  great net by which we capture current solar income, which (eventually, I believe) we will have to learn to live within.  
On living within the means of solar income, see Order of Magnitude Morality: An order of magnitude solar energy / world energy comparison
`The earth receives more energy from the sun in just one hour than the world uses in a whole year'. So, does that mean that we can convert to solar and everything is going to be fine?

No: I show that the current rate of power consumption of the `developed' world is unsustainable. The `developed' world must cut its consumption by at least a factor of 10, and must put all possible resources into developing solar energy technology, which, along with hydroelectricity, is the only* significant source of sustainable power.

* - Some conditions may apply! See below for details

It'd be nice if the battle were only against the right wingers, not half of the left on top of that — François in Paris
by Carrie (migeru at eurotrib dot com) on Wed Mar 12th, 2008 at 06:23:24 AM EST
[ Parent ]
yeah, I've heard that thing about "the earth receives more energy from the sun in one day than the whole world uses in a year."  What are the assumptions behind that?  I am pretty sure that one assumption is:  the EARTH receives the solar input, and what it's compared to is the amount of energy that HUMANS use.  As in, if humans expand their niche to take more solar income, there will be less solar income for the rest of nature to use.  If we use wind power, I can imagine that we would't be stealing solar energy from other life forms.  But if we cut down forests in order to plant things (plants, solar photovoltaics) that bring solar power into our economy, we're not decreasing our ecological footprint by going solar.

Biologists say that humans are currently using 40% of the Net Primary Productivity of the planet.  That ratio  is not sustainable, and has to be--will be--reduced in the future.

I'll check out that link.

Industrial society is not sustainable. Unsustainable systems change--or disappear.

by Eric Zencey (Eric dot Zencey at UVM dot EDU) on Thu Mar 13th, 2008 at 12:15:09 AM EST
[ Parent ]
Biologists say that humans are currently using 40% of the Net Primary Productivity of the planet.  That ratio  is not sustainable, and has to be--will be--reduced in the future.

While the 40 % figure is undoubtedly true, the primary photosynthesis uses only about 2 % of the incident solar energy (and that is only over land - over ocean, the number is considerably lower). The rest is either reflected or goes straight to (mostly) unrecoverable heat (only mostly so, because it is this heat that drives the climate system - i.e. the wind and ocean currents that we can exploit for energy).

In this sense, the only difference between solar and wind is that solar taps into the greater reserve of free energy - ultimately, both wind and solar exploit the remaining 98 % of incident solar radiation. The chopping down of trees to accommodate wind farms or solar panels is thus more an issue of limited space (and the current low conversion efficiency) than limited free energy.

There are limits to the scale of any energy capture technology that we can safely deploy without changing weather patterns (irrespective of whether we are talking wind or solar), but at the moment the relatively modest conversion efficiency of the technology in question makes that a moot point.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Mar 14th, 2008 at 06:38:45 AM EST
[ Parent ]
Intellectual property can go away, if the intellectual body won't get enough food. Even information on PC hard disks, books or even stone won't necessarily last forever.

Michael Hudson wrote or talked interestingly on the history of debt. He kind of agrees with Soddy that compound interest is an evil; it was probably an important factor in destabilizing civilizations since long.

But the analogy with thermodynamics does not look very instructive to me. We have merely a miss-match between exponential math and the physical world.

Generally, to have interesting developments, you need cyclic chains of events, or possibility to return to previous states. Classical thermodynamics kind of forbids cycles in equilibrium regimes; to have dynamics back to higher entropy states you need energy input. Once cycles of events are possible, they may organize and evolve themselves in some vaguely Darwinian fashion.

It is probably more instructive to look at the modern economy not from the bottom thermodynamics, but from a deep Darwinian point of view. Surely, Darwinian methaphors are prevalent enough in economic and social settings. Once you start talking about Darwinism, a whole train of images and recognizable comprehension kicks in - most of it rather irrelevant to a particular discussion.

What I mean by deep Darwinism here is manners in which repetitive events can organize themselves. It is an alternative to stochastic and deterministic chaos understanding of complex phenomena. Instead of wondering at fractals and "butterfly effects", the logic of self-enforcement and impulsive reaction should be appreciated. The physical models (be it stochastic or deterministic) are fine, and they do provide basic cause-effect pieces. But when it comes to pondering about unstable sensitivity to initial state parameters, or stochastic thresholds, limitations of those models should be recognized. That unstable sensitivity can actually be resolved by something outside the limited model! Particular events or causal effects can appear more numerously not by physical inevitabilities but by pieces of the natural selection logic: some events allow themselves to repeat successively, some events are 'suicidal'. Could repates - "repetitive event patterns" be considered as a new kind of replicators, along with genes and memes? (Cybernetic models are quite appropriate to this understanding. )

In the modern economics, the are surely pressures and forcings from macro-economic parameters of inflation and other various growths. But no less important are how macro-economic relations developed historically, and surely, how people and institutions adapt to the 'inevitable' pressures. Events repeat themselves because predominantly only historical pulls and pushes are tried (even if dressed in new ideology clothes), and then institutions and people compete and cooperate in whatever ways... A macroeconomic pressure is not just a given condition; it can become a tool (overt or concealed) of rather intelligent, confident, though not necessarily very bright, agents here and there.

by das monde on Tue Mar 11th, 2008 at 09:37:36 PM EST
[ Parent ]
where I was able to find this: The Lost Tradition of Biblical Debt Cancellations. In my humble opinion, this document has the potential to undo centuries of damage done to Christianity and Judaism by oligarchs and usurers. Especially in the context of economic and financial developments the past year, this is really powerful material:
THE once-glowing core body of law within the Judeo-Christian Bible has become all but ignored - indeed, rejected - by the colder temper of our times. This core provided for periodic restoration of economic order by rituals of social renewal based on freedom from debt-servitude and from the loss of one's access to self-support on the land. So central to Israelite moral values was this tradition that it framed the composition of both the Old and New Testaments.

Radical as the idea of cancelling debts and restoring the population's means of subsistence seems to modern eyes, it had been a conservative tradition in Bronze Age Mesopotamia for some two millennia. What was conserved was self-sufficiency for the rural family-heads who made up the infantry as well as the productive base of Near Eastern economies. Conversely, what was radically disturbing in archaic times was the idea of unrestrained wealth-seeking. It took thousands of years for the idea of progress to become inverted, to connote freedom for the wealthy to deprive the peasantry of their lands and personal liberty.

So far has the modern idea of market efficiency and progress gone that today, although the Bible remains our civilization's defining book, it is perceived largely as a composite of stories, myth and wisdom literature best epitomized perhaps in spirituals and hymns, not economic laws. The Ten Commandments and the Golden Rule have become so dissociated from the economic legislation of Exodus, Leviticus and Deuteronomy that whoever takes these laws in earnest is considered utopian and anachronistic if looking backward nostalgically, or radical if adopting there as a guide for current activism. Yet these laws formed the take-off point for Christ upon his return to Nazareth's synagogue, and for his denunciation of the money-changers who had taken over Jerusalem's temple. As late as medieval Spain the tradition of the Jubilee Year was kept alive by Maimonides and Ibn Adret. To dismiss these laws is thus to remove much of the Bible from the context of its times, above all from its Bronze Age Near Eastern matrix.


Bronze Age rulers had pledged themselves to serve their local sun-gods by overseeing the rhythms of nature and society, periodically "proclaiming economic order and equity." But most such rulers were unseated by classical aristocracies which used religion and its priesthoods for increasingly narrow ends. To defend popular welfare against the incursions of these aristocracies, the authors of Judaism formulated the idea of a national covenant, placing moral order in the hands of their congregations at large. This populism was the counterpart to the civil law of Athenian democracy.

Jewish populism inverted the classical hierarchies of worldly power. Although the aristocratic Pharisee element within the temples asserted its own interests throughout the Hellenistic and Roman eras, Christ sought to restore the archaic ethic by overturning the banking tables in Jerusalem's temple and preaching anew the promise of Jeremiah to proclaim equity and liberty (deror) throughout the land. Indeed, it was specifically on this principle of restoring freedom to debt-slaves and unburdening the land that Christianity elaborated its ideas of redemption. In addition to redeeming souls, early Christians redeemed their co-religionists from worldly bondage. When Handel staged the first performance of his Messiah in Dublin in 1742, it was by no coincidence that the proceeds were used to free debtors from prison. For thousands of years, redeeming men and land from debt was the primary and most concrete form of redemption.

How the Axial Age took the Bronze Age proclamations of order out of the hands of kings
As creditor claims and private property spread outside of the public temples and palaces, the policy of regularly restoring economic freedom gave way to private accumulation of wealth at odds with overall social balance. Rather than being welcomed as ushering in an epoch of economic freedom, his privatization of hitherto communal land and public industry meant a loss of freedom for much of the population.


. . . The first five books of the Old Testament were given their final form late in the fifth century, contemporary with the high tide of Greek democracy in Athens. In 444 BC, Nehemiah, a Jewish official at Persian-dominated Babylon who had risen to the position of cupbearer under Artaxerxes, was allowed to go to Jerusalem to rebuild it. He won popular support by cancelling the debts and redistributing the lands that had been forfeited to local creditors. Making a second visit to Jerusalem, he solidified the groundwork for Ezra the scribe and his associated compilers, who reworked the Holiness Code of Leviticus into the idea of nothing less than a covenant with the Lord to promote economic justice in the land.

These Biblical redactors collated the stories of Moses recoiling against Egyptian inequity and leading the Exodus, of the conquest of Canaan behind Joshua, of the transition from judges to kings, and of the latters' backslidings which led the Lord finally to throw up his hands and let Israel and Judah be conquered by the Assyrians, Babylonians and Persians. The story of Israel's divine punishment served as a parable of how it would be rewarded for following a regime of economic justice but punished for permitting the wealthy to oppress the poor. The land was to be held in trust for the common weal, not relinquished to let the economically aggressive use it as a lever to achieve patronage over domestic clients and hence secular lordship over their countrymen (as occurred most notoriously in Rome). Unlike the case with the Bronze Age rulers who would be punished by their sun-gods for failing to promote social equity, the entire Israelite nation would suffer. Only in the modern era have these stories been decoupled from the laws concerning debt, land tenure and freedom from debt bondage that they originally were designed to wrap, and their social kernel thrown away.


Christ's title of the Redeemer reflects the idea of saving debtors from debt-bondage. If it was their souls that he ultimately was redeeming from worldly shackles, financial power over debtors presented the ultimate test of a creditor's moral goodness. The moral is that charity toward debtors and other poor calls for forgiving their debts. Lending is put forth as the characteristic test for admission to heaven, for it is the most prevalent mode of exerting either coercive power or generosity with regard to one's fellow beings. Luke 6:35 cites Jesus' admonition to "lend, without expecting to be repaid." Centuries of commentary on this passage by medieval Churchmen elaborated how this exhortation meant that a creditor should not demand to be repaid if the debtor cannot do so without injuring himself.

Jesus drove home the conflict he felt to exist between Jewish religious values and the selfish worldliness of creditors in his famous act of overturning the banking tables in Jerusalem's temple. The story is told in all four gospels (Luke 19, Matthew 21, Mark 11 and John 2). Upon entering Jerusalem, Jesus went directly to its temple, where he overturned the benches of the moneychangers and emptied out their moneybags on the floor. He also overturned the tables of merchants selling animals, and made a scourge of cords and "drove them all out of the temple, and the sheep, and the oxen" (John 2:15). Echoing the words of Jeremiah (7:11) some four centuries earlier, he announced that "My house will be a house of prayer, but you have made it `a den of thieves."' This is the only report in the Scriptures of his using violence, and it inspired the city's leaders to plot his death.

Jesus' citation of Jeremiah was deliberately significant, for in this passage the prophet describes the Lord as threatening the Israelites not to make their land and its temples a den of thieves by oppressing aliens, orphans and widows, that is, the most seriously afflicted debtors. To prey on the weak, to monopolize the land and wealth is to seize what belongs to the Lord and his community. The relevant commandment accordingly is the Eighth: Thou shalt not steal. The great absentee landlords were stealing the land and freedom of the Israelites, and thus their destiny. Should the people fail to recall the Lord's spirit and rectify matters, they would suffer national perdition.

The Eighth Commandment in Canon Law, Lutheranism and Calvinism
Neither Hebrew, Greek nor Latin had separate words to disinguish between "interest" and "usury. " The distinction is a product o Canon Law seeking to carve out a form of financial gain (interesse that could be taken by Christians legitimately in the face of the Biblical strictures against neshek (Hebrew), tokos (Greek) and Faenus (Latin).  

by NBBooks on Wed Mar 12th, 2008 at 08:56:09 PM EST
[ Parent ]
Intellectual Property does not "rot away" - although it may be superseded, and less valuable, it exists for ever - and therefore entropy does not apply to it.

If you talk about ides, information or knowledge I am with you (though I agree with das mondes reservation).

If you on the other hand talk about the sets of legislative and limited rights - copyright, patents, trademarks, design patents and so on - that is today marketed under the term Intellectual Property I do not agree. In all of that legislation a entropy of sorts is built in, copyright has end dates (though copyrightlobby is working hard to extend it indefinately), patents run out, trademarks and design patents must be used to be upheld.

IMO, the term "Intellectual Property" is invented for the purpose of lenghtening and strenghtening these rights, which just happens to be the rights of huge western corporations in respect to just about everyone else. Now I do not think that is your purpose, it is just the econo-lingo. But I also think econo-lingo obscures your message making it harder to understand, so a well-meaning advice would be to use knowledge or ideas instead.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Thu Mar 13th, 2008 at 02:28:40 AM EST
[ Parent ]
Wise advice, askd, and exactly right.  

"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Thu Mar 13th, 2008 at 05:09:30 AM EST
[ Parent ]


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