The Economic Implications of The Maximum Power Principle

The Economic Implications of The Maximum Power Principle For a Sustainable Society A GOLDILOCKS CURVE Evolution of Energy Transformation Towards Maximum Power at an Intermediate Level of Efficiency ISBPE 2016, 28 June By: Garvin H Boyle Email: Orrery@rogers. com Website: Orrery-software. webs. com

Sampling of Theories Why Global Affairs are NASTY, UNJUST, AMORAL AND UNSUSTAINABLE. European Colonialism American Hegemony Conflict Between The Great Religions of the Middle East Conflict Over Resources Warring Nations, Blocks of Nations, and Empires Conflict Between The Great 20 th Century Political Ideals – Fascism, Communism, Naziism, Democracy, Capitalism A MODERN COHORT OF SUSPECTS Neo. Classical Economic Theory Globalization By: Garvin H Boyle Email: Orrery@rogers. com Website: Orrery-software. webs. com Multi-National Corporations

The intense emphasis of all species on growth and reproduction And John Kenneth Galbraith’s “Theory of the Firm”! The emergence of life from the seas onto the barren land And The emergence of our dependence on fossil fuels! Adaptive radiation of species And Technological innovation! The explosive emergence of algal blooms, locust swarms, or contagious epidemics And The explosive spread of telephones, televisions and, now, i. Phones! THESE CANNOT ALL BE MERE COINCIDENTAL ANALOGIES. --- THESIS: THERE MUST BE A COMMON DEEP ENERGY-DRIVEN DYNAMIC THAT ANIMATES ALL OF THESE PHENOMENA. The evolution of large dinosaurs, and large mammals And The evolution of large empires, and large multi-national corporations! What is the Common Thread?

A. J. Lotka’s Maximum Flux (1922) … natural selection tends to make the energy flux through the [organic] system a maximum, so far as compatible with the constraints to which the system is subject. Natural Selection Rising energy flux … in evolution two kinds of influences are at work: selecting influences, and generating influences. “Generation” versus “Selection” The question was raised whether … man has been unconsciously fulfilling a law of nature, according to which some physical quantity in the system tends toward a maximum. This is now made to appear probable; and it is found that the physical quantity in question is of the dimensions of power, or energy per unit time …. Application to Human Economic Systems SOURCE: A. J. Lotka (1922) 'Contribution to the Energetics of Evolution', Proceedings of the National Academy of Sciences of the United States of America, Vol. 8, No. 6 (Jun. 15, 1922), pp. 147 -151.

H. T. Odum’s Maximum Power (1955) Our proposition is that natural systems tend to operate at that [intermediate] efficiency which produces a maximum power output. GOLDILOCKS EFFECT Let us make the following postulate: Under the appropriate conditions, maximum power output is the criterion for the survival of many kinds of systems, both living and non-living. In other words, we are taking "survival of the fittest" to mean persistence of those forms which can command the greatest useful energy per unit time (power output). “Power” versus “Efficiency” Generates Variation Application to Human Economic Systems Selection Among the Variants SOURCE: Odum, H. T. , Pinkerton, R. C. , “Time’s speed regulator: The optimum efficiency for maximum power output in physical and biological systems”, American Scientist, Vol. 43, No. 2 (APRIL 1955), pp. 331 -343.

MPP – At the Nexus of Many Concepts Access to Matter of Suitable Type and Availability Power Hypothesized as Broadly Applicable: physical, chemical, biophysical, social, ECONOMIC LOTKA, ODUM Access to Energy of Suitable Type and Availability BOLTZMANN, LOTKA, ODUM ISSUES OF ACCESS Hierarchy of Persistent Forms Efficiency 0 ---------------1 Intermediate Efficiency, Maximized Power ODUM, PINKERTON DARWIN SPECIES DARWIN ENERGY PATHWAYS LOTKA, ODUM SYSTEMS Natural Selection & Evolution

Two Definitions of Power (Biophysical Setting – ENERGY TRANSFORMATION AND CONSUMPTION EVENT) • Useful (or Profitable) Power • Waste (or Operations and Maintenance) Power ENERGY USEFUL ENERGY FLOW INPUTS WASTE ENERGY FLOW Puseful = Euseful / T T = time Pwaste = Ewaste / T EFFICIENCY DEFINED AS = Euseful / Etotal

Two Definitions of Power (Economic Setting – COMMERCIAL PRODUCTION AND SALES EVENT) • Useful (or Profitable) Power • Waste (or Operations and Maintenance) Power TOTAL BENEFITS (B) INCOME COSTS (C) (I) Puseful = B / T T = time Pwaste = C / T EFFICIENCY DEFINED AS = B / I

Antithetic Dynamics Of The MPP HIGHER LEVEL Selection For: • Maximal overall Pw • Maximal overall entropy production • Maximized flux of matter and energy - Overall process effects Lotka Selection For: • Maximal average Pu • Minimal average Pw • Minimal average entropy production per event LOWER LEVEL - Per event effects Odum and Pinkerton

The Goldilocks Hypothesis (A key component of the MPP) • Assumption: For every flow of benefits, there are inputs which are consumed in the process of producing that flow. (E. g. # of workers) • Hypothesis: For every such input, there is an optimum rate of consumption for which the rate of production of benefits is optimized, the consumption of all other inputs being held constant.

The Goldilocks Hypothesis (A key component of the MPP) • One police officer is not enough. • 10, 000 police officers is too many. • There is an optimum number of police that will optimize the rate of flow of benefits (the USEFUL power). BENEFITS EXAMPLE: • In a city of 1 million people, crime has a daily cost. • Police officers reduce the crime daily, creating a daily flow of benefits from reduced crime. 1 POLICE 10, 000

Goldilocks Curves (Plot of Puseful versus ) INCOME COSTS BENEFITS USEFUL POWER & POWER INDEX EFFICIENCY PLOT: I, C&B VS WORKERS PLOT: POWER INDEX VS EFFICIENCY

Goldilocks Curves (Plot of Puseful versus )

Gallery of Goldilocks Curves (Plot of Puseful versus )

Co-Evolution of a Trophic Web Selection For: • Maximal average Pu • Minimal average Pw • Minimal average entropy production per event LOWER LEVEL - Per event effects Odum and Pinkerton

CONSIDER 3 ENERGY PATHWAYS POWER BIOMASS OF THREE PATHWAYS

THE MPP – CO-EVOLUTION AT MANY LEVELS SYSTEM LEVEL MAXIMUM WASTED POWER COMPLEXITY PROVIDES VARIATION IN POWER OF ENERGY PATHWAYS PROCESS LEVEL MAXIMUM USEFUL POWER THE ENTIRE SYSTEM EVOLVES END-TO-END ENERGY PATHWAYS EVOLVE INTER-SPECIES ENERGY TRANSFERS EVOLVE GENETIC DIVERSITY PROVIDES VARIATION IN GOLDILOCKS CURVES AGENT LEVEL ORGANISMS EVOLVE POWER DETERMINES FITNESS OF ENERGY PATHWAYS INTER-SPECIES GOLDILOCKS CURVES DETERMINE FITNESS OF ENERGY TRANSFER

Galbraith’s Theory of the Firm (As explained by the MPP) A B • The neoclassical theory of the firm concludes that … firms attempt to maximize profits. • According to Galbraith: • this may be true in the market sector, where owners of small firms actively manage their enterprises, but • does not describe the far more important planning sector – the 2000 or so largest firms that produce over half of society's output. • The central protective purpose of the firm is survival: • to earn a profit sufficient to keep most stockholders relatively happy, and • to provide sufficient retained earning for investment and growth. Excerpted from: http: //economistsview. typepad. com/economistsview/2006/04/john_kenneth_ga. html

Galbraith’s Theory of the Firm (As explained by the MPP) B) Staffing level with maximum flow of returned benefits (Max Power) A) Staffing level with maximum efficiency

Complexity Enhancing Effects of the MPP (Adam Smith’s Invisible Hand Revealed) • Innovative Variation: sophisticated and innovative business models may enhance the power of an entire supply chain • Such complex supply chains will persist and grow, increasing the flow of energy and the average complexity of the business milieu. COMPLEXITY POWER There seems to be some sort of positive feedback between power and complexity.

RISING COMPLEXITY AND COST OF MAINTENANCE THE MPP AND RISING COMPLEXITY EXAMPLE – A MONETARY SYSTEM Risks, Futures, CCOs, CDSs E&$ Electronic Trading E&$ Bills, Stocks, Bonds E&$ E&$ Gold and Silver Coins Commodity Money Barter

FALLING COMPLEXITY AND COST OF MAINTENANCE THE MPP AND FALLING COMPLEXITY EXAMPLE – A MONETARY SYSTEM Risks, Futures, CCOs, CDSs E&$ Electronic Trading E&$ Bills, Stocks, Bonds E&$ E&$ Base Metal Coins E& $ Commodity Money E& $ Barter E& $

Teleology and Science • Teleology – The consideration of purpose, intention or plan as a causative agent. • As part of the Renaissance, at the birth of science, in the 1500 s, it was decided that all exogenous teleological causes would be excluded from consideration.

Teleology, Science and Business • NCE ASSUMPTION: People succeed in business because they intend to, and make plans to succeed. • THIS IS CLEARLY A QUASI-RELIGIOUS TELEOLOGICAL, BUT FALSE, ASSUMPTION – Who among us plans to fail? The old “free will versus predestination” conundrum.

Pruning Effects of the MPP NCE • Business Model Pruning: those supply chains that consume matter and energy at the greatest rate (at maximum power) will persist, dominating existing markets and expanding the most quickly into new markets, driving others out. • Teleological Pruning: those purposes, intentions and plans that align with the effects of the MPP will persist, while those that do not so align are pruned away. TREE OF GOOD INTENTIONS AND GREEN BUSINESS MODELS (Adam Smith’s Invisible Hand Revealed)

MY POINT IN ALL OF THIS? • Our global economic system is NOT REMOTELY CLOSE TO SUSTAINABLE. • We are captured and being dragged along by a complex, powerful and remorseless dynamic that automatically thwarts all attempts to stop it. • If we don’t put time and energy into understanding it, we are doomed to go with it, right to the final curtain.

Questions? Email: Orrery@rogers. com Website: Orrery-Software. webs. com