Investment as Commitment. Tim Jackson at the Summer School of the Club of Rome in Florence

Tim Jackson speaks at the 1st Summer School of the Club of Rome in Florence, Sep, 2017 (image courtesy of Daniel Reinhardt)

There have been several interesting talks at the Summer School on Sustainability in Florence, but the one by Tim Jackson has been among the most focused and relevant ones. Jackson is the author of the book "Prosperity Without Growth"  (2017) and he goes straight to the core of the problem, which lies in our financial system. We are geared for growth, everything in the system pushes for growth, all the financial structures are rewarding growth. And, as Jay Forrester was perhaps the first to note, economic growth is taking us straight to the Seneca Cliff. 

So, we need to re-examine the basics of our economic system and propose ways to defuse the ticking bomb that we ourselves have created. There is much to be discussed about Jackson's proposals, but one that I noted, in particular, was the concept of "investment as a commitment." I asked Jackson how this is supposed to be different than the current way of investing, and his answer was that, today, investors tend to see the market as a "gamble" in which they may gain or lose; but their main motivation is for big, short-term gains. Clearly, this is not the way that will take us to a saner and safer world. 

The key point of the whole thing, as I see the situation, is in the financial system. If we found a way to divest from fossil fuels and to move financial resources to the transition in the form of renewable energy and the related infrastructure, then there is still hope to avoid the Seneca Cliff, at least in its most brutal form. The question, then, is how to move money to some kind of "investment as a commitment"; investing for something that will last for some time and provide a steady return, not necessarily a spectacular one. 

With Jackson, I discussed the idea of money which steadily loses value with time, or "expires" after a certain length of time. Or also to the old Sumerian idea of "amargi", periodic debt cancellation; a tradition that later led to the Hebrew Jubilee. Possibly, this kind of reforms would lead people to invest in real things. Is it possible? Hard to say. Maybe someone has other ideas? 

The Donut Has a Hole in The Middle: Kate Raworth Speaks at The Summer Academy of the Club of Rome in Florence

Kate Raworth speaks at the 1st Summer Academy of the Club of Rome in Florence, Sep 2017

Kate Raworth is best known, nowadays, for her book titled "Doughnut Economics, Seven Ways to Think Like a 21st-Century Economist." In Florence, she gave a very professional presentation that was very appreciated by the participants. But I remained unconvinced.

The gist of Raworth's idea is that, historically, economics as a science has been shaped in such a way to look like physics; considered by the founders of economics as an example to follow. According to Raworth, this interpretation has distorted economics, making it unable to describe the real world and to do anything to avoid the troubles we are facing, from inequality to financial collapses. 

This is a correct position: economics tends to have an approach similar to that of the physics of 19th century (or even older). It is an approach that works well for simple, linear systems, such as Newton's apple when it falls down. But Newtonian physics cannot describe the biology of an apple, just as it can't describe the behavior of the complex, non-linear system we call "the economy". 

So far, so good: a lot of people are complaining about the shortcomings of the current interpretation of Economics; the problem is what to replace it with. It would seem to be obvious to use the modern approach based on the science of complex systems, sometimes called "biophysical economics", pioneered by the authors of the "Limits to Growth" study of 1972. It is not an easy approach, but it seems to be bringing results. 

The problem with Raworth's book - and with her speech - is that it correctly identifies the problem, but provides no credible alternative. The book is full of qualitative diagrams and discoursive suggestions, but few real world data. Many of the recommendation that Raworth provides are attractive, but they are never quantified, just as the "doughnut" that gives the title to the book. It is a nice diagram, but how to apply it in practice?

As I said, I remain unconvinced about this doughnut idea. It seems to be lacking something fundamental; maybe it is because it has a hole in the middle. 

In the following, I reproduce my previous comment on Raworth's book. 

From "Cassandra's Legacy, June 17, 2017

by Ugo Bardi

Doughnut Economics: a step forward, but not far enough

Doughnut Economics, by Kate Raworth (Chelsea Green, 2017) is an interesting book that goes in the right direction in the sense that it promotes a circular economy, But it leaves you with the impression that it missed that extra step that would have led it to define the goal in the right way. Bridging the gap between standard economics and biophysical economics is still far away.

So, what is this "Doughnut" that gives the title to the book? Initially, I had imagined that it was supposed to be a sort of mandala representing the concept of circular economy. But that doesn't seem to be the case: circular mandalas often represent the cyclical movement of a wheel, but the doughnut doesn't (as, indeed, most doughnuts are not supposed to be used as wheels). Here is how it is represented in the book:

It is described as "a radically new compass for guiding humanity this century." Ambitious, to say the least, but how is that supposed to work, exactly? Maybe I am missing something, but I not sure I can understand why the numerous concepts appearing in the figure should be arranged in a "doughnut."

The problem with the doughnut is not so much understanding why it is shaped like a doughnut, but what it lacks. Look at the outer ring; you will see 10 sectors, all related to pollution: climate change, ocean acidification, chemical pollution, etc. Something is conspicuously missing and it is not a minor element of the overall picture. It is natural resources and, in particular, non-renewable resources (*)

Natural resources, their depletion, and the related concept of "overshoot" are not just missing from the doughnut, they go mostly unmentioned and unnoticed in the whole book. To give you an example, Raworth mentions only once the 1972 study "The Limits to Growth" that was the first to pinpoint the resource problem. In a discussion of less than two pages, I think her position can be summarized by the following statements:

Mainstream economists were quick to deride the model's design on the basis that it underplayed the balancing feedback of the price mechanism in markets. If non renewable resources became scarce, they argued, prices would rise, triggering greater efficiency in their use, the wider use of substitutes, and exploration for new sources. But in dismissing World 3 and its implied limits to growth , they too quickly dismissed the role and the effect of what the 1970s model simply called pollution ... World 3's modeling of pollution turned out to be prescient.... recent data ... find that the global economy seems to be closely tracking its business-as-usual scenario.

As it is often the case in this book, Raworth's statements need some work to be interpreted because they are always nuanced; if not vague, as when she says one should be "agnostic" about economic growth (**). Here, the interpretation seems to be that The Limits to Growth may have been right, but only because it took into account pollution. Instead, its treatment of non-renewable natural resources was wrong because depletion can be completely neutralized by market factors. Raworth doesn't seem to realize that she is contradicting herself, here: if the "business as usual" scenario produced good results in terms of comparison with the real world's economy, it is because it contained depletion as a major constraint. World 3 could also be run in the hypothesis of infinite natural resources, with pollution the only constraint, but the results would not be the same.

That's the thread of the whole book: natural resources are not a problem; we should be worried only about pollution. Raworth doesn't link the concept of the circular economy to recovering non-renewable resources; she proposes only in relation to abating pollution, with the corollary that it also brings about also better social equality. This is not wrong; it is true that a cyclical "regenerative" economy would be able, in principle, to reduce or eliminate pollution. Still, it is curious how the question of mineral resources is so conspicuously missing in the book.

Kate Raworth is described in the book flap as a "renegade economist", but she still reasons like an economist. The idea that the price mechanism will make depletion always irrelevant is old and it goes back to the 1930s, when the so-called "functional model" was presented, stating exactly what Raworth describes. The idea is that market factors will always re-adjust the system and magically make depletion disappear. By now, the functional model is deeply entrenched in the standard economic thought and there seems to be no way to dislodge it from its preheminent position.

The interesting point is that not only economists tend to dismiss depletion as irrelevant. In recent times, the whole "environmental movement" or the "Greens" have taken exactly the same position. All the debate about climate change is normally based on the supposition that minerals, and in particular fossil fuels, will remain cheap and abundant for the current century. If this is the case, it makes sense to propose to spend untold amounts of money for carbon capture and sequestration (CCS) rather than for renewable energy. It goes without saying that, if this assumption turned out to be wrong, the whole exercise of CCS, if it were undertaken at the necessary scale, would turn out to be the greatest resource misplacement of resources in human history, possibly even worse than nuclear energy.

Why is that? As a puzzle, it is difficult to solve. In principle, resource depletion and its negative effects would seem to be easy to understand. Easier than the complex chain of physical factors that leads from the emission of greenhouse gases to disastrous events such as sea level rise, heat waves, hurricanes, and the like. Maybe it is just a question of the lifetime of memes. The meme of depletion started before that of climate change and it is now in its downward trend. Whatever the case, we seem to be locked in a view of the world that misses some fundamental elements of the situation. Where this special form of blindness will lead us is all to be seen. 

Getting back to Raworth's book, despite the criticism above I can also say that it is worth reading for its broad approach and the wealth of concepts it contains. Its discussion on how the science of economics came to be what it is nowadays is, alone, worth the price of the book. Although it misses part of the problem, it may open up new views for you.



(*) You may also have noticed that the concept of "overpopulation" is missing in the doughnut. On this point, Raworth maintains in the text that if people are given the possibility of having a life free of deprivation, they won't reproduce like rabbits - a concept on which I tend to be in agreement; even though its practical implementation in the current world's situation is problematic, to say the least.

(**) The idea of a "zero growth" or "steady state" society would seem to be a fundamental feature of a circular economy, but it is barely mentioned in the book

The Way Nature Works: How Common is the Seneca Curve? Ugo Bardi's Speech at the Summer Academy of the Club of Rome in Florence

Ugo Bardi at the Summer Academy of the Club of Rome in Florence, September 2017. 

My talk at the Summer Academy of the Club of Rome was mainly a presentation of my latest book, "The Seneca Effect" (Springer 2017). In practice, of course, a book contains many more things than you can say in a 40 minute speech. So, I tried to concentrate on the idea that the behavior I call "the Seneca Curve" is very common, even universal. Below, you can see the Seneca Curve: things go up slowly but collapse rapidly, as the Roman philosopher Seneca said first some two thousand years ago. You may see the same curve also on the t-shirt I was wearing at the Academy.

You may have heard the old Latin motto, "Natura non facit saltus" (Nature doesn't make jumps) meaning that things change gradually, not abruptly. It may be true in many circumstances but, in practice, it is wholly normal that Nature accumulates energy potentials (as when you inflate a balloon) and then releases them all of a sudden (as when you puncture a balloon). This is the theme of the cover of the German version of my book.

There are reasons why Nature behaves in this way, but the point I made at the school was not so much about why the curve is so common but how human beings are not normally aware of it. In fact, our thought is often shaped by the idea that things will continue evolving the way they have been evolving up to a certain point. Just think about economic growth, and you'll notice how economists expect it to continue forever. It goes without saying that the economy is one of those complex systems which are most vulnerable to the Seneca collapse.

So, I tried to stress that the understanding that the Seneca Curve exists and it is common is a recent discovery. Even though Seneca had understood it by intuition already almost 2000 years ago, in its modern form it is less than a century old. It was proposed for the first time by Jay Forrester in the 1960s and it was enshrined in "The Limits to Growth" study of 1972, even though the term "Seneca Effect" was not used.

During my talk, I showed this image to evidence how our ideas on the path that complex systems follow evolved over time.

You see how modern the idea of "overshoot" (and the subsequent collapse) is. Malthus just didn't have it. Despite being often accused of catastrophism, he couldn't envisage societal collapse; he lacked the necessary intellectual tools. He was an optimist! Today, we have this concept. We know that complex systems tend not just to decline, they tend to collapse. But this perception is totally missing in the general debate.

When you mention societal collapse, there are two possible reactions. The most common one is that such a thing will never happen. Then, if you manage to convince people that it is possible, they endeavor to do everything they can to keep the system going; whatever it takes. They don't realize that when you exceed the carrying capacity of the system, you have to come back, one way or another. And the more you try to stay above the limit, the faster and the harsher the return will be. What you have to do is to ease the collapse, follow it, not try to stop it. Otherwise, it will be worse.

So, we seem to have a cultural stumbling block, here. Maybe we'll never overcome it, or perhaps yes, who knows? In older times, Emperor Marcus Aurelius, a stoic philosopher just like Seneca, had this concept rather clear. He knew that everything in the world is impermanent; including the Roman Empire.  Being a virtuous man, he did everything in his power to do his duty as Emperor. But he recognized his limits and that's what he said in his "Meditations."

We should recognize our limits, too. Follow change, don't try to stop it. Nature is changing all things we see and out of their substance it will make new things in order that the world will be ever new. This is the way Nature works.

Is it a Bad Idea to Have Fewer Children? Jorgen Randers at the Summer Academy of the Club of Rome in Florence

Jorgen Randers speaks at the 1st Summer Academy of the Club of Rome, in Florence, Sep 2017

The Summer Academy of the Club of Rome saw an interesting debate when a young participant asked to take the floor and speak about what he and his group were seeing as a problem: the current tendency of having fewer children. He showed data about the resulting unbalanced age distribution with too many old people who turn out to be a burden for society. And he said that having such an unbalanced distribution could be a disaster in the case of an economic downturn or even a collapse.

Jorgen Randers produced a strong response to this presentation. I am reporting from memory, but I think I am being faithful to the gist of what Randers said, which was something like this:

"Young man, you gave a very bad presentation. I think it was truly horrible and you should stop giving it. You see, the problem you are presenting is a completely fake problem. It comes from the fact that, in the past, an agreement had developed in most Western societies that the families would provide for children, whereas the state would support the elderly. Now, of course, with more old people, the state must pay more. But we forget that having fewer children the burden for families - and for society - is much reduced. So, there is a simple solution to what you see as a problem: raise the retirement age. That's what my country, Norway, did. They leave citizens to choose when to retire, but they give favorable conditions to those who retire later. And most citizens decide to retire at a late age. Look at me: I am 72 years old, I am still working and I think I'll keep working until I turn 85; then maybe I'll retire. But I keep working and I am not living on a pension, so I am not a burden for society. And I am still caring for my 99-year old mother, who is not a burden for the younger generations. So, the problem you pose is mostly of our own creation and it vanishes when compared with the much larger and difficult problem of overpopulation. We need to take into account that there exist limits to growth and that if we want to solve the problem of overpopulation, we need to have fewer children."

This story is interesting for various reasons. Perhaps Randers was too harsh on the young activist, who wasn't saying that we should keep having many children. But it is remarkable how emotionally charged the issue of population is. For some people, any effort aimed at reducing the burden of the human population on the ecosystem amounts to little less than a sacrilege. An insult to the human right to dominate everything which is not human.

On the reasons for this attitude, I can say little, but it seems to be rather common. I was surprised to see it appearing in a meeting dedicated to sustainability and, surely, it has to be even more common outside the world of people concerned with this subject. As a further example of this humanocentric attitude, I think it is appropriate to reproduce here a post that I published last year on "Cassandra's Legacy"

(note: The presentation criticized by Randers is available upon request, just ask me - ugo.bardi(thingette)unifi.it)


Saturday, June 18, 2016

If Switzerland had a Sahara Desert, it would be a small Africa. Does the world really have an "overpopulation problem"?

Dealing with such issues as oil depletion and climate change is already politically and emotionally charged but, at least, these are physical problems that we can examine using the scientific method. But overpopulation? It is the perfect recipe for an instant politicized quarrel.

The movie "Population Boom" by Werner Boote is a good example of how emotional the population question can become. It starts almost immediately with a potshot at the Reverend Malthus, accused to "have predicted a catastrophe for 1860" (something that poor Malthus never said.). Then, it goes on for one hour and a half in the attempt to demonstrate that there is no such a thing as an "overpopulation problem." Rather, the film's thesis is that the world is seeing a conspiracy by the elites of the rich countries who are trying to stop the people in poor countries from having as many children as they want so that they could become rich, too, and challenge the world dominance of the present elites.

If we accept the idea that all opinions are legitimate, then also this one should be - even though probably a bit too extreme for most of us. The problem is that the way the film tries to demonstrate its thesis oscillates between the boring and the silly; without ever providing a serious argument. Mainly, we see the filmmaker, Mr. Werner Boote, walking around while carrying his umbrella in places where it never seems to rain. In his ramblings, Mr. Boote interviews people who, frankly, don't seem to have a clue about overpopulation, except for seeing it as an invention of the evil Western Elites (and the same is true for global warming, explicitly defined as such in one of the interviews).

Most of the arguments made in these interviews are so silly that they are not even worth deconstructing. Just as an example, in a scene we see Mr. Boote (for once without his umbrella) discussing with a man who tells him that Africa is not overpopulated because it has only 40 inhabitants per square km, compared with the 170 of Europe. Then, the man takes Boote somewhere on top of a hill and he shows him an empty landscape, saying, "do you see? Africa is not overpopulated!"

Now, there are several problems here. First, the numbers are wrong, at least in part. The datum for the population density in Africa seems to be correct, but the population density in Europe is 105 inhabitants per square km, not 170. Maybe Mr. Boote's informant meant Western Europe, but if you take that as meaning the European Union, then the population density still is only 116. Then, one would be tempted to remind to Mr. Boote's informant that Europe doesn't have a Sahara desert; to say nothing about the Kalahari desert and other areas unsuitable for human occupation in Africa. So, he conveniently forgets that an African country such as Nigeria has about the same density of population as Switzerland (nearly 200 people per square km), to say nothing about Rwanda, that has 460 people per square km (more than twice than Switzerland). Finally, one could show to Mr. Boote and to his informant the Yosemite Valley or the Death Valley and then tell them: "you see? Almost no one lives in California!

I could go on, but I think this is enough for this movie. Let me just add that if you think that the poor do not pollute the ecosystem, you would do well reading this post by Jacopo Simonetta.

The Elephant Skin Table: a Reminder of Human Cruelty at the Summer Academy of the Club of Rome in Florence

One of the participants (*) of the Summer School of the Club of Rome looks at an exhibit of the "La Specola" museum in Florence. This table is made using the skin of an elephant and it was a kind of furniture fashionable during the 19th century. The museum has inherited several items of this kind. Correctly, they are not normally shown to the public except in special occasions, such as the visit by the participants of the Summer Academy. Yet, these objects remind us a human attitude toward wildlife that's still common among us. 

For many of us, it is a surprise to discover that, today, 97% of the vertebrate biomass on land is composed of humans and of domesticated animals, leaving only 3% for wildlife (these numbers are obviously approximate, but they seem to be reasonably accurate.) 

Apparently, something monstrous has been taking place during the past few centuries: we managed to exterminate most of the Earth's wildlife and we keep at that as if it were the true human purpose on this planet. As the human population continues to increase, the wildlife population must necessarily decrease. How far are we from the time when there will be no wildlife left? In 1970, Isaac Asimov had optimistically estimated as 2430 AD the year when the last animals of the planet would have been killed but, at this rate of increase of the human population, the complete extermination of vertebrates could take place much sooner. It is an enormous change, something that compares with the greatest disasters recorded in the history of the biosphere  

But human beings seem to be unfazed, or at least most of them. Evidently, they are humanocentric and things haven't changed much from the time when the elephant skin table shown in the La Specola museum was made. Humans continue killing everything as they increase in numbers and whatever disputes the human right of appropriating all the spaces and all the resources of the Earth is ruthlessly eliminated.. 

Will humans ever change their attitude? Hard to say but, at least, I saw these numbers shown for the first time in a public debate at the 1st Summer Academy of the Club of Rome, in Florence, in Sep 2017. The issue was raised by the Club's co-President, Ernst von Weizsäcker, who noted already on the first day of the school how most of the current ideas on how the world is supposed to work were developed in an age when the earth was almost empty of human beings. 

Today, von Weizsäcker noted, the situation is completely different and he mentioned the data about the 3% of wildlife remaining. Then, we should change the way we see the world; challenging the humanocentric view of the world that remains entrenched in the mainstream environmental movement. 

Yet, this information didn't seem to make inroads in the discussion. As far as I can tell, it was never mentioned again in any of the many sessions of the Summer School in Florence. Let's say that von Weizsäcker's talk was a start, at least; but was it already too late?

*(image reproduced with the kind permission of Joséphine von Mitschke-Collande, who appears in the photo)

A depressed man with a smiling face: Jorgen Randers speaks at the Summer School of the Club of Rome in Florence

This is not a picture taken at the summer school, but it is Jorgen Randers, the real one!

Jorgen Randers' speech at the Summer School at the Club of Rome has been dramatically different from the standard speech dealing with sustainability. Randers defined himself as a "depressed man with a smiling face" and he summarized his 47 years of work to promote sustainability as an utter failure. "We are worse off now," he said, "than we were 50 years ago. 

What went wrong? Randers asked to the audience to propose reasons. He got more than a dozen, from the financial system to greed. But he said that none of these is the real reason. It is not a fault of the government, it is not a fault of corporations, it is not a fault of banks. It is, simply, the fault of people. According to Randers, people are simply unable to postpone their immediate satisfaction for a better future. And that's the problem today as it was 50 years ago.

Randers supported his opinion with the example of Norway, the country where he comes from. He said that he and other scientists had prepared a plan that would have zeroed the country's emission by 2050 at a cost of some Eur 200 per person per year for 50 years. It was refused at all levels. The rich and well-educated people of Norway prefer to have an extra 200 Eurs to spend shopping in London rather than give an example of good management of the ecosystem to the world.

Randers's talk arose some strong reactions in the audience, some quite unfavorable. But, really, it made a sorely needed point: we are still reasoning as we were reasoning 50 years ago. We are creating environmental activists who are supposed to push people and governments to do something good for the environment. It doesn't seem to work. Not well enough for what we need to do, at least. And the batch of young activists being prepared at the summer school may face a task that will turn out to be even more difficult than it was for the previous generation.

So, what to do? Difficult to say, but at least asking the right questions is a good starting point

Testing the MEDEAS world model during the Summer School of the Club of Rome in Florence

The Summer School of the Club of Rome in Florence. Above: one of discussion groups engaged in proposing parameters to be run with the MEDEAS world model. In the back, standing, Ilaria Perissi (researcher at the University of Florence) and Jordi Sole (Coordinator of the MEDEAS project). 

A Comment by Gianni Comoretto


42 years ago, when I was 16, I read “The Limits of growth” and it changed my life. I was already worried about things like pollution and overpopulation, but I did not suspect the entity of these problems. I was fascinated by these models, by the possibility to at least have hints of the future we were approaching. I learned programming and I was even able to put the simplest models in a programmable hand-held calculator (a Texas SR52), and some years later on an AppleII. I began to tackle more seriously the problems of an exponential growth in a finite world, sustainable development, renewable energies, energy efficiency…

Therefore when I heard that the Club of Rome was organizing a summer academy in my city, I subscribed enthusiastically. Even after 42 years of activism and study, I have plenty of things to learn. And I met about a hundred of wonderful persons down all over the world. Some I know from a long time, some were for me just names on the front pages of books and papers I read. Most of them much younger than me. Saturday we were presented a new, much improved model of the world resources, society and economy, developed as part of a European framework program. It is much more detailed than the original one, but the basic results are quite similar, and equally gloomy than those of 45 years ago: in the “business as usual” scenario the global economy will still be able to grow for a few years, slowing down until, in 15-20 years, it will begin to collapse very quickly, leaving little behind. 

But this is a school, and the best way to learn is trying. So we divided into 3 groups, and each one had to decide which measures were necessary to guarantee at least a minimum of energy and services for everybody. We settle to 30-40 gigajoule per person per year (about 1 kW of average power use). Of the three groups mine was the only one to be able to guarantee this level at least up the end of the century, basically by adopting: an immediate “controlled recession” of 1% per year a decrease in the global population at a rate of 0.5% per year, that we considered feasible just preventing unwanted pregnancy and increasing women education an increase of 22.5% per year of the installed renewable energy capabilities measures to control the financial market, to reduce inequalities massive reforestation 

Other groups were less aggressive, both in the PIL decrease and in the necessity of installing renewable energies. As a result, their economy stayed significantly higher than ours for a couple of decades, but collapsed only a bit later than in the “business as usual” model. Our controlled recession strategy gave us more time to implement renewables, that in the end saved the day to our slightly reduced population. This lesson taught us lots of things. First, even among people dedicated to these problems, it is not easy to understand what is really necessary. Renewables are not a luxury, and we have not much time to implement them. Last but not least, we will never win the next elections with our program.

Below, Sara Falsini, researcher at the University of Florence (white shirt, standing), engaged with another group of testers of the MEDEAS model.