Why Standard Economic Models Don’t Work–Our Economy is a Network

Reblogged from Our Finite World

Here’s my favourite blogger, Gail Tverberg, connecting dots again. Looking at the points she makes in this post makes it easy to understand why it’s so hard to get all the interconnected problems of energy decline into the 30-second sound bite that most people can cope with. Hence you simply cannot tell people about peak oil. They have to be given this sort of stuff to read, re-read and contemplate. And the average Joe isn’t interested.

Our Finite World

The story of energy and the economy seems to be an obvious common sense one: some sources of energy are becoming scarce or overly polluting, so we need to develop new ones. The new ones may be more expensive, but the world will adapt. Prices will rise and people will learn to do more with less. Everything will work out in the end. It is only a matter of time and a little faith. In fact, the Financial Times published an article recently called “Looking Past the Death of Peak Oil” that pretty much followed this line of reasoning.

Energy Common Sense Doesn’t Work Because the World is Finite 

The main reason such common sense doesn’t work is because in a finite world, every action we take has many direct and indirect effects. This chain of effects produces connectedness that makes the economy operate as a network. This network behaves…

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