Towards a Closed Loop Economy

Innovation is Serious Business. It's the key to prosperity, national security, health, jobs, you name it, innovation will solve it. But for all the talk that gets thrown around about innovation, and innovation policy (at least in the circles I run in), one question which is largely unaddressed is: Can we innovate in any direction we want, or are there historical patterns that describe how technological change produces the social, political, and economic outcomes were aiming for?

The study of economic history is called cliometrics, and one of the seminal works in the field is Chris Freeman and Francisco Louca's As Time Goes By: From the Industrial Revolutions to the Information Revolution. Freeman and Louca develop a theory of innovation centered around Kondratiev Waves, decades long cycles of economic development driven by a “carrier branch technology.” They identify five Kondratiev Waves: water powered machinery, the steam engine, electrification, motorization, and computerization. Kondratiev waves display common characteristics, the carrier branch technology allows vastly more efficient use of resources, while creating new demands for raw materials, new technological innovations, and new forms of social organization. However, each wave's upswing is followed by a downswing, a structural adjustment as the limits of the technology are reached, and the quest for further profits and efficiencies instead leads to the elimination of jobs, and associated social and political unrest. I'll use the steam engine as the canonical example.

Steam engines were initially developed to pump water out of coal mines, and were relatively bulky and immobile. Improved metallurgy and machine tools allowed the creation of lighter, more efficient steam engines capable of driving locomotives on railroads around 1820. Railroads created a new market for coal, which was become cheaper thanks to better mining techniques, but more importantly, made it much easier to bring coal to market. Factories, which previously had to be located by fast flowing rivers, could now be moved closer to population centers and raw materials. Travel became a mass commodity, and millions of people could travel between cities cheaply and easily on a network of new railroads and steamships. Entrepreneurs became extremely wealthy, while many investors went broke in speculative bubbles. The sheer scale of railroad enterprises (thousands of employees as opposed to hundreds, and geographic dispersion) required new techniques of rational management, for example, the Harvard Business School was founded to train railroad executives, while timezones were imposed so that a nationwide train schedule could be coordinated. By 1870, market pressures had forced the creation of massive conglomerates, run by Gilded Age robber barons. Recession and labor unrest reverberated around the world, and wealth production did not begin in earnest until the start of the next Kondratiev wave in the 1890s, when electrification provided a host of new opportunities. Similar stories can be told about each of the other Kondratiev waves.

So what's the take away, the relevance to modern life? Kondratiev waves last about 50 years, in total. The start of the computer age can reasonably be traced back to the invention of the integrated circuit in 1959, or more realistically, the IBM S/360 in 1964, which was the first widely available general purpose computer. The exact date isn't important, what matters is that now, fifty years later, we've reached a point of saturation in terms of computers. Micro-controllers are in literally every possible device. 4.6 billion people have cell phones. Computer chip manufacturing is a cut-throat business conducted on the thinnest of margins. These facts are clear signs of a mature technology, and the downslope of a Kondratiev wave. The economic and political side matches as well. We're seeing persistent unemployment and social unrest the world over, from the United States, to Greece, to Egypt. While the proximate cause of the most recent recession was financial mismanagement (made possible in large part by the computerization of the financial sector, I might note), it seems more plausible that in fact we're experiencing a structural adjustment. Computerization is tapped out as a primary driver of economic growth. Incremental innovation in computers and related technologies will not restore prosperity. What is needed now is a new carrier branch technology.

Carrier branch technologies are big, they fundamentally alter every aspect of production and social organization. What in the pipeline might fit the bill? Nanotechnology is a perennial favorite, but molecular assembly is fifteen years away, and has been since 1986. Human enhancement and biotech is important, but I'm not sure how much it drives at the "means of production." Clean energy might work, but replacing coal plants with solar plants, and gasoline with batteries, doesn't seem big enough for a Kondratiev wave.

This comic [backup link] provides a hint. It tells the Malthusian story of reindeer on St. Matthew Island, where the population expanded exponentially until they hit their resource limit, and collapsed. While the only thing more predictable than a Malthusian prediction is that it will be overturned, the central tenet that in the long run, Earth is a finite system, is a physical fact. So let me speculate, what if the outputs of the economy were identical to the inputs? What if the human economy was a closed loop, taking in only sunlight, and producing the absolute minimum of waste? Stop burning fossile fuels, stop mining metals, stop depleting fisheries and upsetting nutrient cycles, and focus on minimizing

This would require the re-engineering of almost material artifact, every large scale technological system. The amount of human effort would be staggering, millions if not billions of jobs would be created. The potential benefits are large, not only would we be saving the planet, but we'd be growing the economy, because turning trash into wealth is the very definition of alchemy. Moving to a closed loop economy is not just ecologically sound, it's also cost efficient. As Neal Stephenson recently pointed out, sucking resources out of the ground and lighting them on fire as a way to create energy is a method that appears, from the point of view of hypothetical alien anthropologists, to be insane.

The actual policies involved in transitioning to a closed loop economy are far from easy. There are entrenched interests opposing any such shift. Not only is it cheaper to extract resources from the ground, and use the atmosphere as a carbon dump, but humans intrinsically enjoy being part of the larger world. As I've been thinking about this, the image of domed cities and hydroponic farms came to mind, a classic sci-fi dystopia. But as a start, we need to begin collecting information about the total life-cycles of products, and encouraging greater amounts of recycling. We need to identify what technological changes can be done easily, and what will be hard. There will be normative and cultural shifts; consumerism is not compatible with a closed loop economy However, in terms of the grand challenges of the future, the big economic picture, the creation of public policy and the role of individuals, there are steps that can be taken. This is the innovation we need, not only for prosperity, but for survival.

Ramblings prompted by Bruce

You should all read this interview with Bruce Sterling. Full of tasty nuggets on global warming, fiction writing, futurism, Google, other cultures, Texas, science funding, morality.

Rhys: The great Italian writer Primo Levi, who was an accomplished chemist, came to believe that research for the sake of research was fundamentally immoral and that individual scientists should remove themselves from fields of inquiry that might prove potentially hazardous to the human race. Is such a moral approach even possible?

Bruce: Not really, no. That's not practical. Individual scientists have no ability to remove themselves from their sources of funding, and to remain scientists. Governments, academies and major corporations fund their fields of scientific inquiry. Individual scientists do not have any veto power there.
When American politicians told scientists that stem cell research was immoral, the scientists grew indignant. Stem cell research is indeed potentially hazardous to the human race. It's a fact, but scientists don't like to be told that. They launched a counter-campaign to establish that the ban itself was immoral. These scientists were not being cynical. There are good moral arguments for conducting stem-cell research.
Scientists have never been morality experts. Scientists are naive about morality, no better than other technicians such as programmers or engineers. Philosophers and theologians are our cultural experts about morality. These moral experts can argue for or against almost any moral stance, convincingly. Two moral philosophers in a room will always quarrel. Two moral theologians in a room will kill each other.

They would kill Primo Levi, if they could capture him.

Bruce has it right. We can barely anticipate the first order consequences of science, let along the deep moral implications. Otherwise reasonable people can disagree about morality, even to the point of death. And the best moral arguments are rarely proposed by those with the most technical knowledge, while the most convincing moral argument are founded on weak or non-existent philosophical bases (insert Hypno-Beck here).

How then can we as a planetary civilization balance individual morality with the necessity of making group decisions. One path that we have been aiming towards is global homogeneity, through the hegemony of capitalism (or if you want to get into your retro-time machine, world socialism). This approach will always have dissidents and people who are abandoned by the system, extremists who threaten the consensus from all sides. Singulatarians, Al Queda, Black Bloc Anarchists, and Bolivarianism are all opposition to this capitalist consensus.

Perhaps we need a minimalist moral philosophy. Thinkers far deeper than I have tried to strip ethics down to the minimal core principles (Do unto others as you would have them do unto you.) This would work, except that A) many groups want to forcibly extend their ethics and culture to everybody else and B) there are some decisions that have to be made on a planetary scale, like those about pollution, war, treaties and trade, and the future of the human race.

I would like to refer to this post on visions of the future (Wall Street vs Maker Movements) about what kind of governments we need. Global capitalism has brought the world immense wealth, but also dangerous concentrations of power, a complete lack of accountability, and immense inefficiencies and endemic fear of risk and change. Maybe we need a government big enough to dissemble itself.

Those Climate Scientists Deserved It, Acting All Smart Like That

Roger Pielke Jr always has something interesting to say about climate change, and today's post about the politicization of climate science was no exception. Piekle refers to a recent article in National Journal that “Nineteen of the 20 Republican Senate nominees who have expressed an opinion on the widespread scientific consensus that greenhouse gases are altering the world's climate have declared the science either inconclusive or dead wrong, often in vitriolic terms.” Piekle notes that policy has become increasingly hyper-politicized, there's nothing inherently 'conservative' about not believing in global warming, except as a badge of tribal identity. Reconstructing how climate science came to be viewed in such a politicized light would be an interesting exercise, but as it related to contemporary issues, Pielke calls for a de-politicization of climate science. Referring to an editoral by Michael Mann about the Climate-gate emails he says:

“Do Mann and the climate science community actually think that directly linking battles over climate science to upcoming national elections will depoliticize climate science?!

Not only does the public get the politicians that it deserves, but it seems that climate scientists get the politics that they deserve as well. Until the scientific community shows some willingness to take actions that reduce rather than reinforce the political intensity of the climate debate, they are acting as willing accomplices in its hyper-politicization.”

Really, Dr Pielke? Should climate scientists just lie back and take the “vitriol” in the hopes that global warming will stop being a political football? I believe that Piekle is trying to recover a model of science and the state that no longer applies. As Sheila Jasanoff explains, the contract of post-WW2 American science was that the state would supply funding to scientists, and scientists would supply knowledge to legitimate the decisions of the state (Jasanoff, Technologies of Humility: Citizen Participation in Governing Science, 2003) This contract was rendered void by 1990 because of deviant science (see David Baltimore and AIDS), political demands on scientists to legitimate regulations on objects that were poorly defined, like microparticulates and GM foods, and the growing awareness by scientists of the political and social implications of their work.

We can't turn back time to those halcyon days of the early Cold War, so what now? The choices break down into more involvement, or less. Scientists could decide that certain topics are too politically risky to investigate. I believe this course to be a bad one, as the realm of the non-political is microscopic, perhaps only the most abstruse areas of theory are free of politics. And even if scientists relinquish politics, the demand for expert knowledge is too ingrained in American democracy. Whether they want it or not, scientific knowledge will be used and misused by politicians.

The alternative, engagement, is highly risky. It requires the organization of scientists as political actors, from a national to local levels. It demands the scientists act as a class to bestow and withhold the favor of expert knowledge on their representatives. When you play the game, you might win, but you also might lose. Scientists could find their fortunes tied to one party, and a host of issues completely unrelated to science. They could find themselves on the losing end of an economic downturn, or a culture war, guilty by association.

By their words and actions, Republican candidates across America have rejected the favor of science, so what interests do scientists have in supporting them? Let them rule from the gut, let's see how far they get in a society that no matter how much it denies it, relies on scientific knowledge. But from here, scientists face an even more momentous choice. Tactically, their only allies are the Democrats, but Democrats are only marginally more credible on scientific issues. Thomas Friedman (420 Drink KoolAid EVRYDAY) says that we're primed for the rise of a third party. Does science have sufficient credibility and unity to form the core of that party?

Global Waming: A Scientific Problem?

Few places are being affected more rapidly by global warming than the poles, as my recent cruise to Antarctica, with visual evidence of melting ice sheets and personal stories of retreating glaciers, showed. On the trip, Dr David Drewry, one of the ship lecturer's, gave a presentation on global warming, while a group of scientists from America's Palmer Station fielded loaded questions on climate change. In both cases, I was very impressed with how the scientists fielded the issues, making a clear case for why action has to be taken. However, my dinner table, six very intelligent people with political opinions covering a large spread of the left-right spectrum were not so impressed. Their reasons: "We expected more solutions."

Why were my intelligent dinner companions turning to scientists for a solution for global warming? It seemed to be a combination of faith in technical solutions, and a "you broke it you bought" mentality (since scientists pointed out the existence of global warming, they're also responsible for finding solutions). Of course, the solution to global warming is political, not technical, in as it relates to how people use carbon-emitting technologies. I suspect that the vast amount of literature by scientists on how to stave off global warming has been ignored because it is seen as too 'politically naive' (read: asks people to make sacrifices for the common good), while professional politicians have little creditability, because decades of passing technical issues off to scientists until there is a %110 consensus has left them institutionally unable to legislate in regions of scientific uncertainty, like the exact nature of the effects of global warming.

We always go into the future blind. Global warming won't be solved by a single technical fix, rather by robust support of carbon-free energy sources as a prelude to the creation of world economic system that does not rely on fossil fuels. Lots of wealth will be made and lost in this paradigm shift, and we need to accept that these things are never easy, and that the sooner we start, the less painful it will be. Waiting for the perfect scientific solution is only going to make the problems worse.