Hi,

I'm new on the list so I'm still mostly lurking to find out about the 
topics being discussed at the moment. But your question caught my 
attention:

On Wednesday, May 26, 2004, at 10:52  AM, STEVEN BISSELL wrote:

>
>
> Thanks Chris.
(...)
> So, my question remains; other than the obvious things of moving 
> commodities and/or energy from one ecosystem to another, can we 
> directly apply ecological principles/theory to economics in some way 
> other than by analogy?

Yes, and it is related to thermodynamics. In order to acquire a common 
platform of understanding, let me quickly state the following:

Ecology is the study of the "house" aka "world" we live in and how it 
all fits together (... short version :-) ...)

We should also look at the words "economics" and "economy," because 
sometimes we speak on economics when we mean economy and viceversa.

In the question: "Energy is to ecology as ? is to economics" we are 
missing the point or creating a double shift in logic. Why?

First of all, Ecology, just as economics, are both abstractions. 
Ecology, just as economics, is a "study."

Ecology isn't "The Biosphere" or "The Environment At Large."

So, if we wish to take the question literally, we would answer the 
question in the following way:

"Energy flow is to ecology as THEORIES are to economics."

Which, I believe, is hardly the intention of the question. We should, 
thus, restate the question:

Energy flow is to the biosphere as ? is to economics. Economics? Hmm.

ECONOMICS, according to the Oxford Dictionary of Economics, is:

"the study of how scarce resources are or should be allocated. 
Micrcoeconomics examines how production and consumption are organized, 
what is produced, and who benefits. Macroeconomics considers how 
aggregates such as output, employment, and the general price level are 
determined. Positive economics is concerned with what actually happens, 
or what would happen under various conditions. Normative economics 
considers what would be the best methods of economic organization, from 
the point of view of both equity and efficiency. The analysis of 
economic policy requires both normative and positive economics: 
normative economics to choose the objectives of policy, and positive 
economics to check whether the proposed objectives are feasible, and 
what methods of organization would be the most effective means to 
achieving them."

ECONOMY, on the other hand, as per my research, can be defined in the 
following way (taken from TAO OF ECONOMY by Leonardo Wild):

"Economy is the creation of a structure that enables organisms 
—individual people, families, communities, companies, provinces, 
nation-states, corporations, etc.— to acquire the goods and services 
they cannot make (or produce) themselves and which they need for their 
survival and subsequent evolution."

There are three sides to Economy:
1) Consumption,
2) Production,
3) Distribution.

The process by which ecology suffers direct consequences is intimately 
related to production. And production can be defined as follows:

"Production is the use of energy to create changes (processes) in 
materials in general so they can be used for consumption."

This may take us back to finding a similar way of defining Economy, by 
saying the same as above but with different words:

"Economy is the distribution of limited energy —processed into various 
digestible and usable forms— so every organism within the system has 
enough to sustain itself and evolve, now and later."


The issue here is that most people expend their energy (work) in order 
to acquire money with which they can then buy the things other people 
produce so they can fulfill their needs. These needs are fulfilled 
through "distribution":

"Distribution is the circulation and allocation of products so 
consumers’ needs can be met."

And the three sides of distribution are:

1)Transfer (transport) of value,
2)Equalization of “economic pressure,”
3)Information on demand and supply.

1) The transfer of value is done through transportation. Goods are 
taken from where they are produced to where they are consumed.

2) The Equalization of "economic pressure" (another type of transfer of 
value) can be done in two ways:

Barter (goods for goods or services for services or services for goods 
- aka "double coincidence").

Money (money for goods or services or other currencies - aka "multiple 
coincidence").

3) The information on demand and supply means that producers must let 
consumers know where to find what they need ... or even make them 
believe (in the way the information is presented) that they need it.

So, if we look at this scenario, we must restate the question:

Energy flow is to the Biosphere as ? is to Economy.

And the answer:

  Energy flow is to Ecology as "transfer of value" is to Economy."

And here comes the Big Catch:

Transfer of value can occur in two ways: barter or money.

With barter, the things or services bartered are limited by the limited 
energy of the environment in which goods and services are produced and 
consumed.

But with money, we have a serious case of a thermodynamic shift. First 
of all, the "value of money" is a cultural and mathematic value. The 
creation of money doesn't take much energy at all, yet the interest 
rates charged on its use make it, on the one hand, astronomically 
expensive compared to the energy that it takes to match that "value" 
with real goods and services, and on the other puts a pressure on 
production that must follow the growth curve of money, which is 
exponential. In other words, money, as a transfer of value, creates an 
economic pressure on the part of production that it cannot meet and 
that will exceed the thermodynamic capacity of the environment and the 
biosphere.

Producers need money to keep on producing, and consumers need money to 
keep on consuming. The link between production and consumption is, on 
the one hand, and stated slightly differently, "transportation of 
goods" vs "transfer of money."

Money, due to the mathematics of its function "store of value," 
reflects the growth of a cancerous cell that eats up all the energy and 
soon takes over the ecosystem. Money "stored" earns interest, just as 
money "lent" earns interest, and this interest, over time grows 
exponentially, which isn't a natural growth pattern.

In short, money, which is a type of "transfer of value," defies the 
laws of thermodynamics.

Maybe I answered the question and added some new conundrums to mull 
over.

All the best,

Leonardo
PS:

>
> BTW, hope to visit NZ in the next year or two. I'll probably go back 
> to Central and South America for most of 2005, but after that I'm 
> going to try to spend a year or two in the Pacific Basin.

Where in South America?