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(This is actually a question I sent to Blair Fix via email, having read his researches on the relationship between energy and hierarchy and thinking about its implication for some time. But I just decided to re-post here!)
I have read Blair Fix’s works on hierarchy and found how hierarchy derives energy and resource usage very interesting. I think his researches reveal a lot about the feature of human civilization: as society gets more complex, it indeed seems that hierarchy develops and energy and resource usage increases.
I think this point is very important and this is the front upon which law – which ultimately is the way society regulates and allocates rights on energy and rights to command others – has been working (in the way that, unfortunately, exacerbates hierarchy and indeed increases consumption) and with which, I think, law indeed can contribute to dealing with the already happening and incoming environmental catastrophes.
The traditional or mainstream view on environment in law (and economics) is the one based on Ronald Coase’s proposition of “voluntary exchanges” or “right to pollute” which allegedly “maximizes community welfare.” My feeling is that all the usual proposals for both ETS and carbon tax are based on the Coasian view, and I think it’s completely wrong in that 1) its neoclassical basis is wrong 2) it ignores the non-linear and complex nature of biosphere. Ultimately, I think, this view just legitimizes the rich consuming energy and resources as long as they can pay for it – crystallizing the same hierarchy mentioned above.
I also think incorporating the aspect of thermodynamics and physical reality into any analysis is crucial for describing the real world, in that, simply speaking, we can’t live without energy and low-entropy resources. Unfortunately, it seems, most economists and other scholars and policymakers do not care about this aspect. There are now many talks on “green finance”, “ESG”, and so on, picturing some kind of a rosy future in which the current mode of economic growth can persist indefinitely, but I genuinely think people don’t understand what they talk about.
I also think understanding the specific institutional design properties of our society is important, and I agree that the underlying principle guiding these tendencies is power – mostly authorized and exercised in the form of law (as I wrote in the previous post.) Thomas Piketty’s research on the historical trend of income and wealth inequality was indeed valuable, but I think his explanation that “capitalism just increases inequality over time” is very misguided (also to me it seemed that he based on his argument on the false neoclassical conception of capital and he was apparently unaware of the CCC).
I think there are specific legal and institutional designs that have led to these outcomes. One is patent monopoly, which has no economic justification whatsoever, that has enabled the gigantic upward transfer of income and wealth to Big Pharma and elite universities over the last 4 decades – fortunately this issue has gained some attention in recent months with a new focus on TRIPS.
In sum, I think the relationship between hierarchy and energy/resource usage is important, but I think it’ll be much better if there can be some investigation of the specific institutional features and mechanisms of this relationship.
One place from which I think such investigation can start is the issue of urbanization and the development of industrial and logistical value chains. Indeed urbanization is one of the key defining aspects of “development” in human history, across the world, and personal consumption of energy increases as urbanization happens. I think cities can theoretically be more efficient in energy consumption due to the reduction in distances for travel and logistics and more efficient heating in relatively bigger compounds, but it seems that in reality cities “suck” energy and resources from surroundings.
And I don’t think this “sucking” is just a figurative word. The reason cities lead to higher energy consumption is that “”it also provides bigger markets and permits the development of increasingly complex manufacturing and service industries, raising urban productivity still further”, as this article suggest.
https://www.reuters.com/article/us-global-energy-kemp-column-idUSKBN1XN239
In terms of the actual institutional features that lead to higher energy consumption, I think there are several, all of which are related to the issue “supply chain” and the distance of *delivering* stuffs to cities.
1) One is the political economy of car dependency. Although we all know cars are the least efficient means of production, the political economy imposed by car manufactures makes us maximize the number of cars on the road, leading to higher energy consumption.
2) The “complexity” of our mass-produced consumption goods presumably requires consolidation of firms and requires more energy from production itself and all the parts and materials shipped from all over the world. Also the consumerist political economy makes goods less durable, and with all the advertisements, induce constant “fabrication of wants” (as JK Galbraith pointed out).
3) Cities need resources – especially food – that have to be continuously shipped from outside. I mean, how many kilometers have our food on the table passed before getting to us? Probably hundreds or thousand of kilometers. And this has to happen every moment – otherwise billions of population living in urban areas on this planet will starve.
Perhaps I might be focusing too much on these very specific sectors but I think they are important. Transportation accounts for about 16% of global GHG emissions, energy use in industry accounts for 24%, and agriculture accounts for 18%. https://ourworldindata.org/emissions-by-sector
So I think dealing with these issue might be beneficial. Also I think we can get the solution to the ecological crises from this front. At the end of the day, as Albert Einstein pointed out, we live in a mass production society and most people (even in his time) live in cities, and any proposals for making the world better must start from where we are now.
I think hierarchy should be decreased to save humanity. Taxing the rich is necessary, but I think we should go beyond that. I think we should intentionally reduce the complexity of our mass productions, decrease the distance of shipments, and ultimately disentangle the complex, gigantic value chains and build a more locally-based societies (especially with regard to food production) to reduce energy and resource consumption. Of course, we should seriously think about how much the way we consume and live our lives will change if such reduction in industrial and logistical hierarchy and complexity really happen.
What the Covid-19 crisis showed us is that the current “just-in-time” global trade (whether it’s about PPEs or about vaccines) is extremely fragile. And I think the fragility will exacerbate as global warming continues. We’ve already reached 1.1-2 degrees C increase since preindustrial, and what environmental scientists suggest (that most economists and policymakers ignore) is that, as we reach 1.5 degrees C, our food production will be under extreme stresses and our global agricultural system might face the risk of collapse. I think, unfortunately, this is the trajectory we’re in. Global food production will collapse, and just as countries shut down exports of PPEs and vaccines now, I think countries will resort to a kind of “food nationalism.” I think the current global trade, especially that of food, will end, and it might be wise for us to think about how we can reduce dependence on global trade.
This might be my pure delusion, but I think we might need a kind of “ecological antitrust” policies to reduce the size and power of institutions based on, for instance, the complexity of their production and based on the distance of shipment. Of course, this perspective is not something that antitrust law and commercial law currently cover, but I think there are ways that these fields can start to talk about it. (For instance, I think, the “business” protected by the law in fact includes the degree to which it can control and command logistics.)
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Brian —
I think the relationship between energy and hierarchy is double-sided.
Blair’s superb work emphasizes the notion that hierarchy is a means to capturing energy: to capture more energy, humans need larger and more complex organizations, and the most effective way of organizing complex human organizations is hierarchically:
The other explanation is that civilization (say from Sumer onward) is driven by the quest for hierarchical power, and to construct this hierarchical power requires energy. This argument can be described as follows:
The two explanations need not be mutually exclusive, though we need much more theory/research to decipher them and understand their relationships.
You might find our 2020 paper on this subject relevant: ‘Growing Through Sabotage’.
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This might be my pure delusion, but I think we might need a kind of “ecological antitrust” policies to reduce the size and power of institutions based on, for instance, the complexity of their production and based on the distance of shipment. Of course, this perspective is not something that antitrust law and commercial law currently cover, but I think there are ways that these fields can start to talk about it. (For instance, I think, the “business” protected by the law in fact includes the degree to which it can control and command logistics.)
Brian,
I am currently active in the development of a new battery technology intended to enable all-electric aviation (“AEV”, e.g., an 180 passenger commercial airplane capable of traveling from SF to NY on a single charge). I also hope the technology will allow battery storage to cost less than transmitting power over a grid, thus reversing the current power generation and delivery paradigm (which would substantially reduce wildfires here in California).
The problem with getting to zero carbon emissions is about 30% of current emissions have no economically viable solution, which suggests that we will have to do without (or with less of) the products that result in such emissions. Unfortunately, the primary culprits of these emissions are international travel, international shipping, concrete manufacturing, steel manufacturing and chemical manufacturing. International travel/shipping are the easiest for us to tackle in the near term through AEV, and by limiting international shipping to the delivery of raw materials (no more shipping of manufactured goods).
If we seek to address global warming to fundamentally change the nature of globalism by limiting it to the international transfer of capital, raw materials and IP/information, hierarchies will necessarily be reduced in size because they will be regional, not global, for agriculture and manufacturing and local for energy production (solar, wind and hydro). These days (since the ascent of Bork’s analysis), antitrust laws have been largely reduced to being applied with respect to international competition (e.g, anti-dumping), and to secure low-cost and widespread international licensing and transfer of IP/information, antitrust laws may need to be loosened, not strengthened. For example, competitors in the semiconductor industry may need to share fabrication facilities and basic manufacturing technologies (which they already do to a certain extent, but implicitly through common vendors, not explicitly).
FYI – I am not necessarily a proponent of globalism, but capitalist fear change, and maintaining some form of globalism is probably necessary to drive consensus.
P.S. I view most environmental regulation these days as dependent on Pigou, not Coase. Ironically, the so-called Coase Theorem eliminates private property and thus the entire basis for both liberalism and capitalism.
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Thank you!
I used the term “antitrust” in a specific sense that what is needed is a planned control and suppression of the size of industries and corporations, which I think enables and exacerbates the increasing complexity of mass production that seems to be related to the increasing energy and resource consumption! (Again, this is not the exact sense antitrust law of regulations of M&A have been talked about.)
In terms of the dissemination of industrial know-hows and skill sharing that may contribute to the dissolution of the global industrial value change and the localization of production, I wholly agree that, as I wrote above, the current intellectual property regime is unjustifiable and should be weakened.
Of course, an important question the current crises pose to us, is to what extent can we afford the elaboration and complexity of industry? Or, if we have to forsake some of the “stuffs” that we enjoy now, what should we prioritize?
For instance, it seems unimaginable that cutting-edge vaccines (that the world desperately need at the moment) can be produced from facilities without elaborate machinery. Some may argue that in that sense a kind of centralization is necessary. Of course, eliminating the IP regime and with some genuine public research institutions that lead vaccine developments may help reduce it.
But, take semiconductors, which now the media say there are in shortage. Due to the shortage, articles suggest, now productions of “smart” cars, “smart” washing machines, and every other cutting-edge product are all in halt. I think here’s an important question: why do we need them from the beginning? Or, at least, what are the odds that all these “shortages” of semiconductors might have been mitigated had companies been mandated to design and produce products in a way that can be disassembled, repaired, and recycled as easily and effectively as possible?
My feeling is that the”conspicuous consumption” or “dependence effect” aspect is stronger than ever.
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I view Pigou and Coase ‘taxes’ or ‘theorems’ as ‘duals’. They are equivalent ‘in the limit’.
Pigou says ‘polluter pays’ up front. Polluting is defined by ‘expert scientists’ and made illegal and offenders have to pay criminal fines.
Coates ‘theorem’ says same thing except you have to hire a lawyer to make your case that someone harmed you by ‘polluting’.
You have to do your own research to make the case, or hire scientific experts, and also hire a legal team.The Pigou approach has the law already in place; Coates approach says you have to make the law.
Coates is the ‘law and economics ‘ approach.
i recently heard a radio talk by Deirdre McClosky—porfessor emereti at U Iowa — i think she may have been a student of M Friedman and has an interesting history. She takes the Coates approach except she also says things like ‘i like the fact that i don’t have to sue my doctor, pharmacist, or drug company–and do my own research and hire a legal team –everytime i get sick off my prescriptions’.
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